A number of investment institutions have confirmed they have approached the Government, with a proposal to co-invest with the State in re-capitalising the Irish Banks.

The proposal would involve large pension funds and could also facilitate individual investors.

The new initiative is being coordinated by the Irish Association of Investment Managers.

Ireland's leading bankers have been concerned about the prospect of a consortium of private equity investors winning control of the banks.

Some are from Ireland others are foreign but all long-term investors

Among them are Irish Life Investment Managers and Bank of Ireland Asset Management.

While some of the new potential investors are linked with banks they still have strict legal restrictions about where they invest.

The next step will be to see if the Government will co-invest and put public money into the banks.