THE State was forced to take control of AIB, the country’s second biggest bank today.
As the Government revealed it was giving €29-34bn to Anglo Irish bank, it also announced it will own AIB with a new €3bn rescue loan.
The bank’s new management – in place only months – will be cleared out. Black Thursday also saw Michael Fingleton’s Irish Nationwide getting a massive €5.4bn bailout.
Over the next 10 years every man, woman and child will pay nearly €8,000 for Anglo Irish Bank alone, but Brian Lenihan tried to reassure the public this was the end of the nightmare.
The pensions reserve fund will be used to to take a 90pc stake in struggling AIB to keep it afloat.
Under the plan the bank's top two executives have been told to step down by the end of the year.
Finance Minister Brian Lenihan said that the solution offered today was the “only course ... if we are to ensure the future economic wellbeing of our society”.
There was some good news with the confirmation that Bank of Ireland has already met the Financial Regulator's targets for 2010.
But one in every €5 spent by the Government is now going directly into rescuing the banks – and taxpayers can now expect the worst ever budget in December.
By the end of this year Ireland's deficit will hit a Eurozone record of 32pc of GDP, although this is a oneoff spike. This figure is expected to drop to around 11pc next year and must be down to just 3pc by 2014.
Central Bank Governor Patrick Honohan said that today's announcement “takes the Irish banking system close to a final resolution of its restructuring”.
It is hoped that the figures will reassure the international markets that Ireland can rebuild its economy.
But Mr Lenihan revealed that the country is to cancel international bond auctions that had been planned for October and November.
This is thought to be a reaction to the spiralling interest rate – hitting almost 7pc – on Irish borrowings.
The Exchequer is fully funded up until the end of June 2011 and Mr Lenihan said that normal bond activity would resume early next year.
Labour's Joan Burton said that today's figures only offered “levels of certainty”.
“Those are shocking figures,” she said, adding: “I think it's very sad that AIB has not been able to be helped by the recovery mechanism.”
AIB's shares plummeted by as much as 19pc in early morning trading to stand at just 45c.
Mr Lenihan also revealed changes to the workings of NAMA which will no longer take loans of less than €20m from AIB or Bank of Ireland. The threshold had previously been set at €5m.
According to the Minister, this will keep 650 debtors with property- related debts out of NAMA. They account for just €6.6bn of the €80bn of loans that qualify for NAMA.
MUCH was made yesterday of the arrest of Joe McNamara, who drove a cement truck into the front gates of Leinster House in protest at the continuing bailout of Anglo Irish Bank, and its crippling effect on the country's finances.