Ireland: Banks "are up for sale"

Ireland's banks are up for sale, the country's central bank chief said, as the government seeks to cut them down in size after their reckless lending forced the country to seek an international bailout.

"They are for sale as far as I am concerned," Patrick Honohan said on Tuesday. "I have been an advocate for a number of years for small countries to have foreign owners for their banks".

Dublin has already said it will intensify reform of the banks and surplus activities will have to be discarded.
Analysts said there was limited scope to sell assets and any sales could be at a discount, or require the government to cap potential losses.

Dutch Finance Minister Jan Kees de Jager warned there will have to be pain in any consolidation.

"The amount of money needed to clean up the Irish banking system is now being studied by experts. Shareholders and holders of subordinated bonds in Irish banks will have to bleed in a restructuring process," he said.

Allied Irish Banks has already sold prize assets in Poland and the United States and last week halted the sale of its UK business due to a lack of interest.

"We are of the view that any fast-track forced disposal of assets will more than likely have to come at a discount to book-value, even after allowing for government indemnities in relation to future loan losses," said Ciaran Callaghan, analyst at NCB in Dublin.

He said that the government faces a "difficult task" in accelerating the deleveraging of assets and reducing its reliance on European Central Bank funding.