IRISH LIFE and Permanent (ILP) says it may need more than €2.5 billion from the State to meet a capital bill of €4 billion following the bank stress tests.

The new chairman of ILP, Alan Cook, told shareholders at his first annual meeting in Dublin yesterday that “this will have huge consequences for all our shareholders”.

He told shareholders he would argue for a limit on the losses imposed on them when he meets Minister for Finance Michael Noonan over the coming weeks.

However, he stressed that he was unlikely to be able to reduce the €4 billion bill and did not want to leave shareholders with the impression that this was possible.

The company is facing outright Government control, with shareholders being wiped out, even after selling the most profitable part of the group, Irish Life.

“To say that this turn of events is disappointing would be a huge understatement and I know that what has happened has caused great sadness and real financial difficulties for shareholders,” Mr Cook said.

He said ILP was expected to require more than €2.5 billion from the State to meet the higher capital target after raising an estimated €1.5 billion from a trade sale or flotation of Irish Life.

ILP had no choice but to accept the stress test results given its reliance on Central Bank funding.

“That’s a very difficult position from which to argue for greater flexibility or leniency or time,” he said. He described the State’s capital target as legal but unfair.

At a fiery annual meeting, ILP shareholders argued against the sale of Irish Life, with one describing it as the “family silver”.

Speaking to reporters afterwards, Mr Cook declined to say whether Irish Life would be disposed of in a trade sale or flotation, refusing to rule anything out.

The disposal was “probably an inevitability”, he said, as the company took whatever steps it could take to raise as much of the €4 billion bill on its own.

In a trading update, ILP said that arrears of more than 90 days on its mortgages increased by 17 per cent to 13,500 cases over the first four months of the year.

Customer lapses in the retail life business rose 10 per cent in the first three months compared with the same period last year.

ILP blamed lower household incomes and “continuing weak business conditions” in the economy.

Permanent TSB has lost deposits of about €300 million this year.

Deposits totalled €13.3 billion at the end of April, up from €11.1 billion last December due to the transfer of deposits from Irish Nationwide Building Society.

European Central Bank loans dropped to €13.1 billion at the end of April from €13.8 billion at the end of December.

Permanent TSB’s bad debt charge would be broadly in line with the €420 million provisions in 2010.

Total loan impairments over the next three years would be €1.2 billion based on the base-case scenario under the Central Bank stress tests, the company said.

Appointed just over four weeks ago, Mr Cook said that it was important to have someone who “cared for all stakeholders at the helm for what is going to be an uncomfortable journey”.

“I may not be able to change the ultimate destination that much but I could make the journey a lot better,” he said.