Ireland’s High Court said Allied Irish Banks can be taken over by the government without shareholder approval, as the lender became the fourth bank to fall under state control since 2008.
Finance Minister Brian Lenihan secured approval from the Dublin-based court today to inject ¤3.7 billion ($4.8 billion) into the lender by December 31 and raise its stake to 92 per cent from 19 per cent, the Finance Ministry said in a statement. Allied Irish, Ireland’s biggest company by market value in 2007, recorded its biggest share price drop in 22 months in Dublin trading. Worth almost ¤21 billion at its peak, the bank’s market value today was ¤341 million.
“We wouldn’t have had Allied Irish Banks on the 1st of January if this investment wasn’t made,” Lenihan said in an interview.
Irish banks are grappling with loan losses after the collapse of a decade-long real-estate boom. The state has already taken control of Anglo Irish Bank, Irish Nationwide Building Society and EBS Building Society. Irish Life & Permanent, the only Irish lender to avoid a bailout so far, will try to meet new capital requirements from its own and from market resources early next year, Lenihan said. So will Bank of Ireland, which is 36 per cent state-owned, he said.
Allied Irish needs to raise an additional ¤6.1 billion by the end of February to reach a new target of 12 per cent for core Tier 1 capital, a gauge of financial strength.