Irish government announces rescue plan for banks

Irish government announces rescue plan for banksDublin  - In a move aimed at restoring confidence in the banking system and encouraging lending, Ireland's government on Sunday announced a 10-billion-euro (13.4-billion-dollar) rescue plan for the country's banks amid the deepening global financial crisis.

The government said it would use money from the 18.7-billion-euro state pension fund to invest and also wants existing shareholders and private investors to support a recapitalization.

"It's very important that our banking system is seen to sustain our economy," Finance Minister Brian Lenihan told state broadcaster RTE on Sunday.

Over the next few days, Lenihan will meet chiefs of Allied Irish Banks, Bank of Ireland, Irish Life Permanent and Anglo Irish Bank to discuss proposals for an injection of new capital into the system, the Irish Times reported.

The government's bold efforts to save the banking system by guaranteeing it up to 400 billion euros in September have had little effect and mergers are expected among the major Irish banks, which are owed an estimated 100 billion euros by the construction industry. (dpa)