DUBLIN - USING public money to support Irish banks in the ongoing global financial crisis remains 'a last resort', Irish Finance Minister Brian Lenihan said on Sunday.
'In the first instance, the banks have to demonstrate their capacity to attract private capital,' he told RTE public radio.
'The markets, after all, have said they have a very low value now, and there is an onus on the banks in the first instance to demonstrate their capacity to convince persons in the markets out there that they worth investing in.'
Mr Lenihan added: 'I have made it clear that the state putting money into the banking system is a last resort.
'If private money is prepared to invest in the banks on appropriate terms and on terms that serve the public interest, then of course the government would welcome that.'
Mr Lenihan made his remarks amid news media reports that some international groups are interested in acquiring stakes in Irish banks. There is also talk of a possible consolidation of Irish financial institutions.
Recession-hit Ireland was one of the first countries to respond to the credit crisis with a two-year unlimited guarantee scheme in September that involves a contingency liability of 485 billion euros (S$934 billion).
Mr Lenihan called this a 'first step' in reforming the banking sector. But since then, the government has neither bailed out nor nationalised any banks - nor have the banks raised equity themselves.
Last week a government-commissioned report on the loan quality of Irish banks confirmed there was no threat to their solvency, and that they can meet existing regulatory capital requirements.
'However, there is a world of difference between a solvent bank and a bank that is thriving and putting credit into the economy,' Mr Lenihan said.
'The government's core concern is that the banks don't just survive as institutions, but that they exist as a motor in the economy. The banks do require some funding to ensure that the economy is stimulated and can move forward and they can operate as proper credit institutions.'
Mr Lenihan added that, under the terms of the guarantee scheme, the dividend policy and business plans of Irish banks have to be supervised by the government. -- AFP
