Ireland to inject $10 billion into banks: source

[Joanne98]

DUBLIN (Reuters) - Ireland's government plans to inject 8 billion euros ($10.3 billion) into the country's top two banks and is in talks to underwrite some of the lenders' potential bad debts, a source close to the talks said on Monday.

The recapitalization plan, which is set to be unveiled later this week, doubles the amount Dublin had originally said it would invest in Allied Irish Banks (AIB) (ALBK.I) and Bank of Ireland (BKIR.I).

"There is a small bit of tinkering yet to be done," said the source, who declined to be named because of the sensitivity of the talks.

The finance ministry, AIB and Bank of Ireland all declined to comment.

The source said the government wanted to divide the 8 billion euros equally between the two banks but AIB, which has previously signaled a weak appetite for state funding, is reluctant to accept 4 billion euros.

In December, the government said it would invest 2 billion euros in each of AIB and Bank of Ireland via preference shares, giving Dublin 25 percent voting rights over "key issues."

It also said it would underwrite their plans to raise an additional 1 billion euros each.

With the new plan, it was not clear what the breakdown will be between preference shares and ordinary shares. Continued...

http://uk.reuters.com/article/partiesNews/idUKTRE5112BZ20090202