Irish gov’t may lead bank rescue .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} DUBLIN - Ireland’s government may lead a 10 billion-euro ($13.4 billion) bailout of the country’s banks after the collapse of the country’s property boom and the global financial crisis depleted capital.

The government wants shareholders and private investors to support a recapitalization and it will use money from the 18.7 billion-euro state pension fund to invest, the finance ministry in Dublin said late Sunday. The state may buy preference shares and ordinary shares or underwrite a share issue.

"What I’m mainly concerned about is that the banks are in a position to extend credit," Finance Minister Brian Lenihan told state broadcaster RTE. "That’s why we want to make this gesture, a demonstration of confidence in the banks, by upping their capital to show that their buffers are so strong, they are indestructible."

Deposit guarantee
Ireland, the first country in Europe to guarantee the deposits and borrowings of its largest lenders, had resisted injecting public money into the banks, instead pushing them to seek private investment.

"This move is to be welcomed," said Kevin McConnell, head of research at Bloxham Stockbrokers in Dublin. "It removes some uncertainty but more details will be needed by the market."Ireland’s economy may shrink as much as 4 percent next year, Lenihan said last week. Construction is contracting at a record pace, unemployment has risen to the highest in more than decade and house prices have fallen 10 percent in the last year.