Irish banks in need of an extra €24bn

Markets reacted strongly after stress tests carried out by Ireland's Central Bank found the sector i

Stress tests carried out by Ireland's Central Bank yesterday found that the banking sector needs an extra €24bn to remain in business, brining the Irish government's total bail-out to €70bn.

Allied Irish Banks, which initially had to raise an extra €5.3bn now needs to raise €13.3bn. Bank of Ireland needs €5.2bn, Irish Life & Permanent needs €4bn and Educational Building Society €1.5bn. Ireland will also need another €10bn from the IMF and the EU.

Shares fell as the markets opened this morning, except in the Bank of Ireland, which rose by 26 per cent. The European clearing house LCH. Clearnet also raised the penalty it charges on Irish government bonds by 10 per cent, from 35 to 45 per cent.

Ireland's finance minister Michael Noonan said that in order to help economic recovery through restoring public and market confidence, he was going to create "two new strong universal pillar banks" comprised of Allied Irish Banks and the Educational Building Society, with the Bank of Ireland in a position of reduced power.