The Government has announced the terms under which it will recapitalise three of the country's biggest banks.

Click here for more details on the bank recapitalisation plan

It will take €1.5 billion in preference shares in Anglo Irish Bank and €2 billion in preference shares in each of Bank of Ireland and Allied Irish Bank.

The move will give the Government 75% per cent control of Anglo Irish Bank.

Making the announcement tonight, the Taoiseach said the scheme would send a strong signal to the markets about the stability of the Irish financial system.

Anglo Irish Bank is to be recapitalised with €1.5 billion.

It will take the form of preference shares, with an annual fixed dividend of 10%. The shares carry 75% of the voting rights of the company.

The investment is subject to the approval of ordinary shareholders at a general meeting to be convened as soon as possible.

It has also been agreed with Bank of Ireland and Allied Irish Banks that both banks will issue €2 billion of perpetual preference shares to the Government with an annual dividend of 8%.

These shares will have voting rights in terms of the change of control and any changes in the capital structure.

They will confer 25% of the voting rights in respect of the appointment of directors and 25% of the directors on the board.

These are subject to regulatory and shareholder approval.

All institutions may redeem the preference shares within five years at the issue price or after five years at 125% of the issue price.

The Government is prepared to underwrite further issuance of core capital and both AIB and Bank of Ireland have indicated an interest in such an underwriting in an amount up to €1 billion each.

The Taoiseach said the objective of the decisions is to ensure that the financial system in Ireland meets the everyday financial needs of the individuals, businesses and the overall economy.

The Labour Party leader has told RTE's The Week in Politics programme that the bank recapitalisation plan represented a poor deal for the State.

Eamon Gilmore said there was no upside for the tax payer under this plan.

The party’s spokesperson on finance, Joan Burton, said the decision to invest in Anglo Irish Bank was highly questionable.

Kenny wants Dáil recalled to discuss scheme

Fine Gael leader Enda Kenny has called for the Dáil to to be recalled this Tuesday so the recapitalisation programme can be discussed.

Mr Kenny said that given the scale of the investment involved of taxpayers' funds, and the risks associated with the investment, the Government must recall the Dáil to elaborate on its proposal.

The party's enterprise spokesman, Leo Varadkar, said while the announcement on the recapitalisation was welcome, there were some concerns about the proposals.

He said he was concerned the money being put into the banks may not be enough, and that they may have to come back for more.

He also expressed particular concern that €1.5 billion was being put into Anglo Irish Bank, which he said has lost the confidence of the market and the public.

Mr Varadkar said a wind down operation at the bank might be more appropriate.