The overseas private equity investors who want to buy Bank of Ireland have challenged the rival group of private investors, led by the Irish Association of Investment Managers (IAIM), to show the money they plan to inject into the Irish banks, or leave the field.
Sources close to the private consortium of mostly US investors, including JC Flowers and Carlyle Group, said the IAIM "should show us the plan" for investing in the Irish banks.
They also said finance minister Brian Lenihan was "trying to play off" the rival private groups competing to buy stakes in the Irish banks. The comments come after bank chief executives and the would-be private investors met separately with Lenihan on Friday.
It is understood the government wants lending to resume at significant levels as soon as possible. In discussions involving government officials, Merrill Lynch, the Central Bank, the Financial Regulator and the Department of Finance, the idea of setting up a special bank solely to lend to small and medium-sized businesses has surfaced.
The government is open to the idea of recreating an ICC-style bank to serve local businesses around the country. It has also paid close attention to how the UK government now has a nationalised bank in the shape of Northern Rock at its disposal.
Meanwhile the rival group could bring much more than €2bn to the table in its bid to recapitalise the ailing institutions, according to the Irish Association of Investment Managers (IAIM).
According to IAIM chief executive Frank O'Dwyer, the €2bn figure quoted in several reports last week did not represent the upper limit of the consortium's commitment. He also said a specific figure had not been mentioned in his meetings with the Department of Finance, although he approached the government only when a "credible number" was guaranteed.
"Nobody knows what the required level of recapitalisation is," he said. "If the right opportunity is there, there would undoubtedly be additional funding available."
Corporate deposits have flooded back into Irish banks since the guarantee scheme was announced on 30 September. However major US and European corporations are still only leaving their funds on deposit for short periods. Most of the money deposited is for periods of 24 hours to a week, rather than three months. Money has returned but confidence remains brittle, despite the recent initiatives by government.