The Government has announced that €10bn is to be made available for recapitalising the banking system, with the aim of encouraging lending and restoring stability. The fund will be made up of money from the National Pension Reserve Fund, private investors and existing shareholders. Banks that wish to participate in the recapitalisation plan will have to submit proposals in January. Each application will then be viewed on merit, with those institutions seen as most essential to the wellbeing of the economy being given priority.
The Government will take preference shares in return for investment. Those shares have priority over ordinary shares in the payments of dividends and give a fixed return annually.
The news failed to buoy financial stocks on Monday. Banks once again put in a weak performance, with AIB gaining just 3c to €2.00, Bank of Ireland fell by 1c to €0.97, Anglo Irish was at just €0.36 - down 1c - and Irish Life and Permanent dropped by 4c to €1.62.
Meanwhile, Anglo Irish Bank, Bank of Ireland and Allied Irish Banks have been ejected from the FTSEurofirst 300 Index of top European shares following a collapse in their share prices and market capitalisations. The three banks will be removed from the index on December 22.
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