Irish banks bounce as government pitches in

It has been a long time coming, but the Irish government has finally announced a five and a half billion euro aid package for the country’s top three banks.

The Dublin stockmarket liked the news, although one analyst said it was just a good start and would put a floor under bank shares only until the new year.

AngloIrish will now be 75 percent government-owned. The government also sees other advantages:

“The investment in these shares is coming from our pension fund. Our pension fund will earn four hundred and seventy-one million euros from this investment. Our pension fund has lost a lot of money in worldwide investments in this last year,” says Finance Minister Brian Lenihan.

Banking shares soared on the Dublin stock exchange on the news, with the Bank of Ireland nearly doubling in value, but Anglo Irish, after initially rising over 20 percent, fell back and lost 30 percent as there were worries it would not do as well as its competitors when the dust settled.

In addition the market expects there will be new equity raised by the banks early next year.

Copyright © 2009 euronews

tags: Economy