September 29, 2010 / 8:22 PM / 8 years ago

UPDATE 1-Dublin to pump up to 3 bln euros into Allied Irish -FT

* Allied Irish needs to raise 7.4 bln euros by year-end

* Fin Min: Anglo Irish sub-debt holders to be addressed

DUBLIN, Sept 29 (Reuters) - Irish Finance Minister Brian Lenihan is expected to inject a further 2 to 3 billion euros of state capital into Allied Irish Banks ALBK.I, the Financial Times reported without naming any sources.

In the text of an interview with Lenihan published on its website, the newspaper said the announcement would be made on Thursday when the government has said it would detail the final costs for winding down nationalised Anglo Irish Bank. [ANGIB.UL]

No one at Allied Irish Banks was immediately available for comment.

Allied Irish needs to raise 7.4 billion euros of capital to meet new Irish regulatory demands by the end of 2010 and sold its 70 percent stake in Bank Zachodni BZWB.WA to Banco Santander (SAN.MC) for 3.1 billion euros this month.

Allied Irish, which hopes to hold a rights issue later this year, is also close to selling its 22.5 percent in U.S.-based M&T Bank Corp (MTB.N)(MTB.N) to Santander, a person familiar with the matter said last week. [ID:nLDE68L1NR]

The government has said it stood ready to increase its 18.6 percent stake in Allied Irish and the Financial Times said Lenihan would make the announcement of fresh capital in anticipation that the bank would be targeted by the markets.

Irish borrowing costs have climbed to euro lifetime highs and triggered jitters across Europe over the as yet unquantified bill the country will have to foot for stricken Anglo Irish Bank. [ID:nLDE68S0AX]

The Financial Times quoted Lenihan as saying that issues around Anglo’s subordinated bondholders “will be addressed” during Thursday’s announcement, something Lenihan reiterated in parliament late on Wednesday.

Lenihan also restated to the paper that Ireland would repay the banks senior bond holders in full. (Reporting by Padraic Halpin. Editing by Robert MacMillan)

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