Fine Gael said this evening it will not back an emergency €1.5 billion ($2 billion) recapitalisation of Anglo Irish Bank by the Government. Earlier today the European Commission approved the bail-out.
Party leader Enda Kenny said the recession-hit financial institution should get new management and be wound up in the next seven years.
The European Commission announced this morning the recapitalisation aid was in line with EU state aid rules being applied during the current financial crisis.
"Anglo Irish Bank has an important role within the Irish financial sector - a loss of confidence in this institution could have led to a further disturbance of the current financial situation and harmful spill-over effects to the economy as a whole," the commission said in a statement.
The effective takeover of Anglo Irish by the Government with an investment of €1.5 billion for a 75 per cent control is "an adequate means to remedy a serious disturbance in the Irish economy while avoiding undue distortions of competition . . "
However, speaking this evening, Fine Gael said it intends to table a private member’s motion in the Dail opposing the capital injection when sittings resume later this month.
"We believe that the money could be used for better purposes," said Mr Kenny.
"The markets have no faith in this bank to be able to continue. We believe it should be wound up in an orderly fashion over the next five to seven years, " he added.
Mr Kenny issued the warning after a meeting of his front bench in Co Kildare, where parliamentary strategy was also discussed.
Anglo Irish's shareholders must agree to the recapitalisation plan at an extraordinary general meeting that will take place on Friday.
The European Commission was formally notified by the Irish Government of the plan six days ago.
The commission said today the bank has an important role within the financial sector and a loss of confidence could have exacerbated the financial crisis in Ireland and could have damaged the wider economy.
Anglo Irish will be being charged 10 per cent a year interest by the State and the commission said the financing package was designed to prevent an abuse of the state support
"The commission also took into account that the probability of return for the State is reinforced through the possibility of combining the dividend payment in cash and ordinary shares," according to the commission statement.
It concluded that the Government's recapitalisation plan for Anglo contained behavioural rules to prevent an "abuse of the State support", including a ban on advertising of the aid and restrictions on executives' remuneration.
"Due to the current financial crisis, even banks that meet the regulatory solvency ratios may experience distress and be required to reinforce their capital," said the commission statement.
The commission notes that under the plan the bank is required to submit a restructuring plan within six months for its assessment and approval.
Additional reporting: PA
