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Sale of Irish Life collapses at a cost of €1.3 billion to taxpayer

The Department of Finance said challenging market conditions did not support the sale in recent days.

Image: Laura Hutton/Photocall Ireland

THE STATE’S BILL for recapitalising Ireland’s troubled banks just increased by €1.3 billion as the Government revealed the sale of Irish Life has collapsed.

In a statement issued late last night the Department of Finance confirmed that none of the bids received for the profitable life assurance arm of the Irish Life & Permanent  group were acceptable at present.

The sale process had attracted significant interest from numerous parties and a shortlist of potential buyers was drawn up.

However, the Department said the “very challenging market environment in recent days was not supportive to achieving an outcome that recognises the strength of the Irish Life business”.

Canada Life had been the frontrunner while a bid from US firms JC Flowers and Apollo Global Management was also received. A third expression of interest from CVC Capital Partners was also shortlisted.

Both Germany and Italy had bad bond auction experiences during the week, once more raising concerns about the stability of the eurozone and impacting negatively on the process.

What happens now?

The Government said it will continue to work with Irish Life & Permanent to complete the recapitalisation process so it meets the Central Bank’s capital requirements.

Stress tests earlier this year found that IL&P required a further €4 billion in State capital. Since then it has been effectively in public ownership as the Government owns 99.5 per cent of the company.

So far €2.7 billion has been pumped into the group so another €1.3 billion is required.

It was hoped that the sale of the profitable arm of the group would partly fund the recapitalisation of Permanent TSB, the banking division.

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