Ireland will take a majority stake in Allied Irish Banks as part of a restructuring of the sector in the process of setting up the National Asset Management Agency, a bad bank, the Sunday Tribune reported.
The paper said the extent of state investment in Bank of Ireland remained uncertain as - unlike in the case of Allied Irish - the cabinet believed it had an "outside chance" of raising sufficient funds privately through a rights issue.
The newspaper report, which did not clearly cited sources, was printed alongside an interview with Finance Minister Brian Lenihan but the comments on the two banks were not sourced to him and his spokesman said he had not addressed the issue in the interview. "He's always said that depending on the losses that happen after the valuation of the land and development (loan) books (transferred to NAMA) and (depending on) the need for recapitalisation, the state may take majority stakes in the banks but we've never separated out the two (banks)," the spokesman said.
The government has acquired 25 percent indirect stakes each in the two top lenders Bank of Ireland and Allied Irish Banks after injecting 3.5 billion euros ($5 billion) into each via preference shares.
The Sunday Tribune also said there were plans for a "third force" in Irish banking, adding that bancassurer Irish Life & Permanent might end up with 45 percent of that new group.