IRISH REPUBLIC BANKS ‘FOR SALE’
Shares in Irish banks have slumped this week
The Republic of Ireland's top banks – bailed out by the government at huge cost during the downturn – should be sold, the head of the country's central bank has said.
Patrick Honohan said: “As far as I'm concerned, they are for sale”.
The Irish government will outline plans to reform the banking sector, into which it has pumped 45bn euros ($61bn; £38bn), on Wednesday.
It is getting a European Union-led bail-out that may total 90bn euros.
The International Monetary Fund (IMF) will also contribute to the rescue package.
Mr Honohan described the EU and IMF funding as “a kind of a backstop for the banking system”.
Stock markets around the world fell on Tuesday as a result of fears both that the bail-out may not resolve the Republic's debt crisis, and that other countries with high budget deficits may be forced to ask for assistance.
Among the stocks hit hardest were Bank of Ireland, which slumped 27%, and Allied Irish Bank, which fell 14%.
“I've been an advocate for many years of the value for small countries to have foreign owners for their banks, because the risk is carried by the foreign owners,” Mr Honohan said.
Analysts said that the government would have to accept a cut-price deal in the event of any sale.
“We are of the view that any fast-track forced disposal of assets will more than likely have to come at a discount to book value,” said Ciaran Callaghan at NCB in Dublin.
Mr Honohan also said that plans for a so-called “bad bank”, known as the National Assets Management Agency (NAMA), designed to buy up the bad debts of the big Irish banks, had not worked as planned.
“[NAMA] has not had the result we have hoped for,” he said.
He did, however, say that it was “not surprising” the plan had not yet worked given the scale of the bad debts held by Irish banks.
The Irish government will publish a four-year budget plan on Wednesday, which will provide some detail of spending cuts and tax rises amounting to 15bn euros, including 6bn euros next year.
The Irish Republic has already implemented billions of euros of cuts, which have proved deeply unpopular with the Irish population.
There are growing calls for an immediate Irish general election in protest at the government's handling of the economy.