Ireland to keep two banks private

Shares in AIB and Bank of Ireland have been falling sharply

The Irish government plans to keep the country's biggest lenders, Allied Irish Banks and Bank of Ireland, private.

The government had vowed in December to pump in billions of euros in exchange for a 25% stake in each of the banks.

But shares in the two banks have been falling amid fears they might need a bigger-than-expected cash injection by the state.

It comes after the government nationalised Anglo Irish Bank last week on concerns it could collapse.

On Tuesday Finance Minister Brian Lenihan said in the Irish parliament that the two banks were "fundamentally sound and solvent institutions."

"The government re-affirms that it is proceeding with the planned recapitalisation of Bank of Ireland and Allied Irish Banks on this basis and its firm intention is that both banks remain in private ownership," Mr Lenihan said.

Last week, Mr Lenihan announced plans for a government takeover of Anglo Irish, and its shares were suspended.

The government had previously proposed taking a 75% stake in Anglo Irish at a cost of 1.5bn euros.

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