Irish Government Ups Stake in Allied Irish Banks

Ireland’s pricey financial rescue just got pricier as the government announced plans Thursday to inject another 3.7 billion euros into Allied Irish Banks (NYSE:AIB), making it the fourth Irish lender to be effectively nationalized.

The Irish government said the cash infusion was needed so Allied, once Ireland’s largest publicly traded bank, would meet year-end capital requirements. The recapitalization will boost Irish taxpayers’ stake in Allied from 18.6% to 92.8%.

"We wouldn't have had an AIB on Jan. 1 if this injection wasn't made,” Irish Finance Minister Brian Lenihan told state broadcaster RTE Radio.

Allied said it has been ordered to de-list its shares from the Main Securities Market of the Irish Stock Exchange and apply to be listed on the Enterprise Securities Market.

Allied’s U.S.-listed shares plunged on the latest capital infusion announcement, diving 16.63% to 91 cents Thursday morning. The stock has plummeted nearly 70% year-to-date.

Other Irish banking stocks took a hit, including a 3.95% decline to $2.43 for Bank of Ireland (NYSE:IRE).

“Failure to complete the transaction prior to year-end would likely prompt further action from the Irish State, including the possibility of full nationalization,” Allied said in a statement.

Slammed by the bursting of a real-estate bubble, Ireland has buckled under the strain of its expensive bank bailouts.

Earlier this year it reached a deal to receive an 85 billion euro rescue from the European Union and the International Monetary Fund, joining Greece as the only two EU members to receive a bailout.