AIB says it has accepted the Government's recapitalisation funds of €3.5 billion, announced last night.
The bank said the total represents an increase of €1.5 billion over the €2 billion previously announced and it added that the package contains features designed to assure the market of the bank's stability and independent future.
The bank said it had carefully considered the current market conditions and the best interests of its stakeholders. In December it said it had hoped to raise an additional €1 billion itself, but since then it said that share prices across the banking sector had seen further volatility.
'In Ireland, this factor has been exacerbated by negative market sentiment following developments in the UK banking sector and the nationalisation of Anglo Irish Bank,' a statement from the bank said.
'In these volatile conditions, any attempt at present to raise Government underwritten equity in the market could result in a material level of state ownership,' it added.
AIB says the €3.5 billion recapitalisation will increase its 2008 pro-forma core tier one capital ratio to about 8.5%.
It said the bank customer package in the recapitalisation package are in line with its ambitions for its business and are positive for the economy, its shareholders and staff.
'I welcome this initiative and consider that it strongly supports the vital objective of improving market confidence in Ireland, our banking system and AIB. I thank the Government for the positive and commercial approach taken in reaching this agreement,' commented AIB's CEO Eugene Sheehy.
Earlier, Mr Sheehy said that he regrets some of the lending decisions that his bank made in recent years and that the company could have made better decisions.
In an interview with RTE's Economics Correspondent George Lee he said that AIB was very grateful to the Government for its support which, he said, was critical at this time.
Credit rating agency Moody's has downgraded AIB's long-term credit ratings, saying the move is due to expectations that its impairments will increase substantially. It said a slowdown in AIB's main markets would also affect profits. The debt which is covered by the Government's guarantee scheme is not affected by the change.
Shares in AIB closed down 16 cent at 93 cent in Dublin.
