Only two Irish banks left after £61bn crisis

Ireland will have just two main banks after one of the costliest financial crises in history, with the final bill for bailing out its system reaching E70bn (£61bn).

The country’s chief banker, Patrick Honohan, revealed yesterday that another E24bn is needed to keep lenders afloat and avoid a catastrophic crash. With taxpayers paying the bill most of Ireland’s banking system will effectively be brought under state control.

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The promised final bill – E70bn – is half the value of the entire Irish economy.

Central Bank governor Mr Honohan disclosed the amounts needed to safely buffer four banks against further shocks after long-awaited stress tests on the institutions. Allied Irish Bank (AIB) needs E13.3bn (£11.7bn), Bank of Ireland needs E5.2bn (£4.6bn), building society EBS requires E1.5bn (£1.3bn) and Irish Life and Permanent needs another E4bn (£3.5bn), he announced.

Mr Noonan indicated Ireland’s six domestic lenders would be replaced by two “universal pillar banks”, the Bank of Ireland, seen as the strongest, and Allied Irish Bank, which will merge with EBS.