Ireland creates group to get bank credit flowing

DUBLIN May 19 (Reuters) - The Irish government is creating an organisation tasked to ensure banks provide ample credit to businesses, Deputy Prime Minister Mary Coughlan said on Tuesday.

The "Credit Supply Clearing Group" will identify cases where the flow of fresh funds to business appears blocked and will look for solutions and report back to the government on the issues addressed.

The committee will have representatives from government ministries, industry bodies and the banks, including Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I).

The Irish government owns a 25 percent indirect stake in the country's top two lenders and has warned it may end up with majority stakes following the creation of a 'bad bank', which will take over property loans with a book value of up to 90 billion euros.

"The establishment of the Credit Supply Clearing Group will build upon the actions already taken by this government to stabilise the banking sector and ensure that the banks meet their commitments under the recapitalisation package," Coughlan said in a statement.

Earlier on Tuesday, Bank of Ireland raised its expected bad debt charge for the three years to March 2011 to 6 billion euros ($8 billion) and warned there was a downside risk to that forecast should Ireland's recession, already the deepest on record, worsen.

But Chief Executive Richie Boucher said the lender was adequately capitalised and did not foresee the need for further funds from the state. [ID:nLI414621]

(Reporting by Andras Gergely; Editing by Richard Hubbard)