Finance Minister Brian Lenihan says he expects to announce the details of the recapitalisation of Bank of Ireland and AIB tomorrow.
Officials from his department are in negotiations with officials from the two banks in an effort to finalise the arrangement.
Mr Lenihan said the Government was awaiting certain guarantees from the two banks, in particular the length of a moratorium on the repossession of family homes, lending to small and medium enterprises and pay and bonus schemes of senior bank officials and directors.
Earlier it was reported that Bank of Ireland and AIB had agreed to hold off on issuing repossession orders for those in arrears on their home loans for 12 months as part of the recapitalisation plan. The banks have told Government that delaying repossession proceedings for any longer would be viewed negatively by investors.
Mr Lenihan was speaking in Brussels on the margins of a meeting of EU finance ministers. He said that the Department of Finance had retained an auctioneering firm to try to value the development land assets held by the banks, which have fallen sharply in value.
Mr Lenihan said the Government was determined to help clean up the balance sheets of the banks, but had to do so in a way that protected the interest of the taxpayer.
Fine Gael, Labour warn on banks plan
Meanwhile, Fine Gael's finance spokesman Richard Bruton has said the Government's recapitalisation plan may not work as it could leave taxpayers exposed to enormous bad debts.
Mr Bruton said the Government should urgently consider other options, including the creation of so-called 'good banks' with clean balance sheets, into which the recapitalisation money would go.
He said the taxpayers' interest was to kick-start new lending, not to protect the existing banks.
The Labour Party has warned that the €7 billion the Government is planning to put into the two main banks 'could disappear as rapidly as melting snow' if it is not handled properly.
Finance spokesperson Joan Burton said this Labour was putting forward eight principles that should apply to recapitalisation which would ensure major reform of the banking system.
These are: get credit flowing to business; identify the scale of bad assets, and then write them down; establish an Irish Banking Commission; regime change and capped executive pay in the banks; a full investigation of Anglo Irish Bank; a moratorium on family home repossessions; and a continuing presence for mutual (building) societies.
