The State expects to provide more capital to nationalised Anglo Irish Bank this year on top of the €4 billion paid in 2009 and €10.3 billion so far this year, Taoiseach Brian Cowen said.
"The current estimate is that the overall capital requirement could be of the order of a further €8 billion," Mr Cowen told the Dáil this morning. He did not specify if all of that sum would be provided this year.
Anglo, which was nationalised last year after deposit and loan scandals and exposure to a property market crash, wants to be split into a "good" and a "bad" bank, but the option of a wind-down is also being considered in talks with the European Commission.
Mr Cowen said an immediate liquidation of the bank, which some opposition parties are demanding, would mean a fire sale of assets and capital losses of at least €40 billion to the State.
If the bank was immediately wound up, the Government would also need to provide €70 billion of cash to meet deposits, bondholders and liabilities to the European Central Bank, he added.
"It's a bank of systemic importance," Mr Cowen said. "Even if it weren't, let's recall that Lehman Brothers is a much smaller bank in the US system than this bank was in the Irish system and we know the consequences when that bank was let go to the wall."
The capital injections into Anglo last year gave Ireland the biggest budget deficit in the European Union compared with the size of its economy. The bailouts this year have been done by way of a promissory note, which means actual payments will be spread out over up to 15 years.
Reuters