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Irish authorities act to quell fears over banking sector

The Irish authorities have tonight announced a plan which they believe will allow the Irish banking sector to rebase and regroup for the future. This comes after a dramatic time for the Irish banking sector which has seen a number of banks bailed out by the government and a number of controversies hit the headlines. So what is the government offering?

While many people believed that the Irish government would step in and nationalise the majority of the banking sector it would appear this is not the chosen method of rescue. The authorities are looking to introduce government backed guarantees regarding bank funding in a move which mirrors that made by the Swedish authorities during a similar crisis a decade ago.

The government has already issued guarantees and funding which is now in the tens of billions of euros and more funding will be required to pump liquidity and confidence back into the sector. However, while the authorities are not looking to nationalise the sector as a whole it may well be forced to take controlling stakes in Bank of Ireland and Allied Irish Bank, which are currently looking to raise private capital although may need to go cap in hand to the government in due course.

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