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Dublin: -2°C Monday 17 January 2022

Government to receive stress test results this week

The results of the new Prudential Capital and Liquidity Assessment Reviews were received by the Central Bank this weekend.

Image: Peter Morrison/AP

THE IRISH GOVERNMENT will this week learn the latest revised cost for bailout out the country’s crippled banking sector, when it receives the results of the latest round of stress tests.

The Prudential Capital Assessment Review and the Prudential Liquidity Asessment Review – dubbed ‘P-CAR’ and ‘P-LAR’ – will reveal the capital shortfalls currently affecting each of the four institutions that the government hopes to keep alive.

Those institutions are AIB, Bank of Ireland, Irish Life & Permanent and EBS – the latter of which is about to be auctioned off.

The Central Bank is understood to have received the results of the new tests over the weekend, with the results then being forwarded to the cabinet this week ahead of a public release next week.

Yesterday’s Sunday Business Post reported that the main concern of the results would be the total capital deficit run up by AIB, which could find itself requiring another significant injection of public cash in order to stay afloat.

The losses run up by AIB – which is now in majority state ownership – may also come on top of other significant losses in other institutions, which could rise even further than the amounts already anticipated if the new tests foresee a slower economic recovery than was first thoughts.

The ‘key economic council’ of Enda Kenny, Eamon Gilmore, Michael Noonan and Brendan Howlin were to meet today to discuss the results of the tests before Noonan travels to Brussels to meet his Eurozone counterparts on reducing Ireland’s bailout interest rate.

The Post also suggested that the State hoped to replace its own investment in some of the institutions – particularly Bank of Ireland – with investment from the private sphere.

The new tests were announced by the Financial Regulator in November, and come ahead of the results of separate European stress tests which are due to take place between now and June.

It was suggested at the weekend that those tests could reveal a ‘black hole’ of €35bn in the banking sector.

Central Bank stress tests consider 13.4% per cent drop in house prices >

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Gavan Reilly

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