DUBLIN (Reuters) - The Irish government is expected to present bank recapitalisation plans on March 30 sending shares down Monday on worries they would have to raise more capital than earlier thought.
The finance ministry declined to comment on a report in the Irish Times newspaper which said it would present bank recapitalisation plans next week and give an update on the price the bad bank will pay for property loans.
A report in another paper, the Sunday Business Post, said the valuation of the first tranche of loans to be transferred by next week would cause a negative surprise. That in turn would require the banks to raise more capital than earlier expected.
"It will be negative for the banks," one Dublin-based trader said.
Dublin has already pumped a total of 11 billion euros (9.9 billion pounds) into Allied Irish Banks, Bank of Ireland and nationalised Anglo Irish Bank, all of which will need further capital as they transfer loans to the National Asset Management Agency (NAMA).
Shares in Allied Irish fell 7 percent by 1122 GMT at 1.46 euros, while Bank of Ireland shed 6.7 percent to 1.2 euros and the European banking sector was 1.7 percent weaker.
The two biggest listed banks will try to raise capital from private sources first but the government may have to help them. It will certainly have to bail out other NAMA participants, which also include building societies EBS and Irish Nationwide.
Based on initial estimates, Finance Minister Brian Lenihan was expecting to pay 54 billion euros for property loans with a combined book value of about 80 billion euros held by five financial institutions.
Next week Lenihan is expected to give an update on the loan discounts and how much extra capital the banks will need as a result.
Lenihan's statement could coincide with earnings announcements from Bank of Ireland and Anglo Irish Bank, both of which have shifted their business years but have not set firm dates for their next report.
It is expected that the first transfer of loans to NAMA will have taken place by the time of Lenihan's speech next week, ending months of delay, the Irish Times said.
(Reporting by Andras Gergely; Editing by Erica Billingham, Mike Nesbit)
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