It is likely Anglo Irish Bank will need additional capital, says Lenihan

ANGLO IRISH Bank may need more funding, Minister for Finance Brian Lenihantold the Dáil.

He said that with the stability provided by full State ownership, and with a new board appointed at the bank, it was now in a position to address the issues it faced, including the development of a revised business model, to restore market confidence.

“It is likely that Anglo Irish Bank will need additional capital, but the extent and the timing of that need is still being assessed and discussed,’’ Mr Lenihan added.

He said that prior to nationalisation the Government had envisaged investing €1.5 billion capital in the bank. The bank’s board was currently preparing a new business plan for the bank.

Meanwhile, Fine Gael finance spokesman Richard Brutonrejected a Labour call for a temporary nationalisation of the banks.

Speaking during the resumed debate on a Labour private members’ motion, advocating nationalisation, Mr Bruton warned that they had to tread carefully when considering the option.

“It may not require the immediate injection of cash up-front, but it does force the taxpayer to shoulder all of the problems created by the banks.

“It risks the taxpayer having to pay too much for the shares. It allows professional investors, who funded highly risky activity by the banks, to walk away scot free.

“And it politicises new lending decisions by the banks which, in other countries, have seen big powerful companies win out over small businesses.’’

Mr Bruton said he favoured the establishment of a national recovery bank. This would be a wholesale bank, funded by the European Central Bank and be ready to provide the necessary liquidity to the covered banks to get credit flowing.

Labour finance spokeswoman Joan Burtonsaid the "Fianna Fáil-Green Government's velvet-glove approach'' to the banks would not work. A Government amendment, endorsing its banking policy, was carried by 73 votes to 59.