Cost of rescuing Nationwide may rise to €3.2bn

Tuesday 17 August 2010 22.56
Irish Nationwide - Final cost will be around €3.2bn
Irish Nationwide - Final cost will be around €3.2bn

The Governor of the Central Bank has indicated that the cost to the State of rescuing Irish Nationwide Building Society is likely to be much higher than first estimated.

This comes a week after it emerged that the final cost of bailing out Anglo Irish Bank could be more than €24bn.

In a speech in the Chinese capital Beijing, Professor Patrick Honohan said the potential cost to the State of EBS and Irish Nationwide will be about €4bn, which means the final cost of Nationwide will be in the region of €3.2bn.

Earlier this year, Minister for Finance Brian Lenihan said Irish Nationwide would need around €2.7bn from the Government to meet targets set down by the Financial Regulator.

In May, the society's chairman Danny Kitchen told members it may need even more than this.

Last month, it emerged that NAMA had paid just over a quarter of the original value for the latest set of loans it was taking on from the society.

One of the likely factors in the increased cost is that the loans Irish Nationwide is transferring to the National Asset Management Agency are turning out to be worth much less than expected.