The Government does not have a policy to nationalise the banks, though this could happen in theory, Minister for Finance Brian Lenihan said today.
"It is our policy that nationalisation should be the last resort and not the first resort," he told reporters during a visit to France.
However, asked whether the State could see its stake in AIB and Bank of Ireland rise to a majority level, Mr Lenihan said the possibility existed in theory because of the mechanics of "the bad bank" plan recently agreed.
"We have indicated that we intend to acquire impaired assets from all these banks. Should that occasion further losses, any further state investment will be investment by way of ordinary shares. That might have the result of increasing the proportion of state ownership ... to a majority level, yes," he said.
"We think it is important that some element of market surveillance remains for these institutions," he added.