March 31, 2011 / 10:10 AM / 9 years ago

TIMELINE-Ireland's string of bank bailouts

DUBLIN, March 31 (Reuters) - Ireland will publish what is meant to be the final bill for propping up its banks on Thursday in a last-ditch bid to convince investors it can avoid deepening Europe’s debt woes with a damaging restructuring.

Over 20 billion euros more is expected to be pumped into the banks, effectively nationalising the entire financial system, but whether it draws a line under the banking crisis will depend on whether the ECB gives further support and investors believe this is truly the final bill.

Here is a timeline of events:

Sept. 30, 2008 - Just days after becoming the first euro zone country to slide into recession, Ireland becomes one of the first to respond to the Lehman Brothers collapse, guaranteeing 440 billion euros of liabilities at six Irish-owned institutions and a foreign-owned bank.

Finance Minister Brian Lenihan boasts a month later it would be “the cheapest bailout in the world” and it prompts similar moves across Europe to prevent capital flooding to Ireland.

Dec. 21 - The government says it will inject 5.5 billion euros into the country’s three main lenders and will also underwrite Bank of Ireland BKIR.I and Allied Irish Banks ALBK.I plans to raise 1 billion euros each.

Jan. 15, 2009 - Ireland abandons plans to inject 1.5 billion euros into third largest bank Anglo Irish Bank [ANGIB.UL] and nationalises the commercial lender amid fears it could collapse.

Feb. 11 - Ireland says it will inject 7 billion euros into Bank of Ireland and Allied Irish in return for guarantees on lending, executive pay and mortgage arrears. It gets a 25 percent indirect stake in both banks.

April 7 - Lenihan announces the creation of a “bad bank” to deal with the risky property loans of financial institutions. The National Asset Management Agency (NAMA) is established six months later, ready to take assets worth a nominal 77 billion euros at an average discount of 30 percent.

May 29 - Ireland is forced to inject up to 4 billion euros into Anglo after its loan book sours and drags the bank to a half-year loss of 4.1 billion euros, at the time the worst loss in Irish bank history. It manages to more than treble that record within two years.

Feb 19, 2010 - The government takes its first direct stake in Bank of Ireland, taking over 16 percent of the lender in lieu of a payment due on the 25 percent indirect stake it held.

March 30 - NAMA buys a first batch of loans at an average discount of 47 percent — requiring lenders to raise more capital to absorb losses than previously envisaged.

The central bank also demands that lenders hold a minimum 8 percent of core Tier 1 capital by the end of the year. It sees Ireland take control of Irish Nationwide building society [IRNBS.UL] with a promised capital injection of 2.7 billion euros. Dublin pumps another 8.3 billion euro into Anglo, and says it may need another 10 billion euros.

May 13 - The government takes an 18 percent stake in AIB after it, like Bank of Ireland, is prohibited by an EU ruling from settling a coupon payment on the government’s 3.5 billion euros preference shareholding in cash.

June 9 - The state’s Bank of Ireland stake rises to 36 percent after a 3 billion euro capital raising, reaching the central bank’s capital ratio target with six months to spare.

Sept. 30 - After weeks of speculation over how much Anglo will cost the state, helping push Irish borrowing costs to euro lifetime highs, the central bank estimates the final bill could be as high as 34.3 billion euros, up from 22.3 billion.

Dublin puts another 2.7 billion euros into Irish Nationwide, doubling its state aid, and tells AIB, EBS and Bank of Ireland they need to raise even more capital. It says it will take a majority stake in AIB.

Nov. 29 - Prime Minister Brian Cowen signals junior bondholders at Ireland’s top two banks should expect to share some of the pain, as public anger builds with calls to “burn the bondholders”. Ireland ruled out forcing holders of bank senior debt to take a hit, however.

Dec. 15 - The government tops up an earlier 350 million euro capital injection into EBS [EBSBS.UL] by pouring an extra 525 million into the building society.

Dec. 23 - Ireland effectively nationalises AIB with a 3.7 billion euro capital injection, giving it a 93 percent holding once the bank completes the sale of its Polish interests to Spanish group Santander (SAN.MC). As part of Ireland’s 85 billion euro IMF-EU bailout, the bank still needs a further 6.1 billion euros of core tier 1 capital.

Feb. 9, 2011 - The outgoing government shelves plans to inject up to 10 billion euros into banks until after an election, throwing down a challenge to opposition parties who want bondholders to shoulder more of the cost. The new government then delays the cash injection until the release of stress tests results on March 31.

Reporting by Padraic Halpin; editing by Patrick Graham

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