Ireland facing 'horrendous' €50bn bill for bank bailouts

1 October 2010

Ireland may have to pay out as much as €50 billion ($68 billion) to bail out its struggling financial sector.

According to the Financial Times, its costs could reach this figure, which is equivalent to more than one-third of last year's national income.

Finance minister Brian Lenihan has described the costs facing Ireland as "horrendous" and stated that its budget for 2011 will have to be re-adjusted.

"A fundamental reappraisal of the public sector will have to take place in which we secure absolute value for money in the delivery of services," he said.

Anglo Irish requires €3 billion and is launching an equity issue, which is being fully underwritten by the National Pension Reserve Fund.

This means the government could end up owning 90 per cent of the bank's stock.

Earlier this week, Mr Lenihan said Anglo Irish cannot be allowed to fail because of "its size relative to the national balance sheet".

By Tony Aynsley

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