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%.
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"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.