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Alan Dukes, the chairman of Anglo Irish Bank, expects that the additional €25bn of the €35bn earmarked for the banks – which the government has maintained will be used only in exceptional circumstances – will be needed in full to cover more losses across the banking system.
He said he had no "insight" into potential losses on residential mortgage and company loans in banks because Anglo was a commercial property lender but that, in his view, the €10bn earmarked would be used and that the other €25bn "will be needed" too.
Dukes said a public debate was required about the nature of the banking system and the number of banks that would be needed when the economy starts recovering.
The government has insisted that, after the first €10bn to be injected into banks in early 2011, the next €25bn would be "contingent" on more stress testing of the lenders. The troika of international lenders have together pledged €67.5bn of the €85bn rescue package and €17.5bn will be drawn from Ireland's own resources – the National Pension Reserve Fund and its remaining cash balances.
On the night of the EU-IMF loans press conference two weeks ago, Taoiseach Brian Cowen said the €25bn would not necessarily be used, while €50bn in loans designed to plug the budget deficits would be enough to run the state for the next three years.
But Chris Pryce, lead analyst at Fitch Ratings, the ratings agency that downgraded Ireland last week, estimated that the €50bn would last for only two-and-a-half years because €22bn alone, including bond repayments, would be required next year.
"You would not get three years out of it," Pryce told the Sunday Tribune.
Lorcan Roche Kelly, Ireland's leading central bank watcher, said new figures showing that the Central Bank of Ireland had increased its funding to Irish banks to €44.7bn by the end of November suggested that other banks apart than Anglo Irish were drawing on the "exceptional liquidity".
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Have the banks a plan for when the economy recovers without them? Which in itself is a contradiction? All they understood was property lending but it turns out they did not "understand" property lending!
The government can not run the HSE never mind run the banks?
Not long ago Elderfield and Honohan were telling us the banks were well "capitalised". Then, suddenly, they needed 10bn from the IMF with another 25bn held as contingency. Oops! It seems Mr Dukes says the 25bn will not be "contingency" as it will be required. Then of course BTL's will start defaulting spurred on by Lenihan's stupid and probably illegal elimination of section 23 reliefs which amount to retrospective taxation. Is he trying to force more bankruptcies because that is what he will achieve. Billions more will be required to stem the flow. At least 33% of these BTL mortgages will default.
Who in their right mind would ever enter into agreements with the government knowing they make up "the rules" as they go along. There is no "memorandum of understanding" with it's own citizens only, we need money and we need it now by god to save our own skins! Have a problem with that? Sue us!