Irish banks could need more than $40 bil.
A man leaves the Bank of Ireland in Dublin. Ireland admitted Monday it is in contact with 'international colleagues' over its debt crisis but denied seeking a bailout.
STEVE CHIOTAKIS: Today could be another critical day for Europe as it grapples with its debt crisis. Authorities in Ireland will unveil just how healthy, or unhealthy, Irish banks are as part of a new stress tests.
From London, Marketplace's Stephen Beard is with us live to talk about it. Hi Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: We reported months ago that Ireland was bailed out. Why are we back here again?
BEARD: Well, yes it was bailed out, with loans from the EU and the IFM. And the Irish government has already pumped a lot of this bailout money into its banks. But this clearly isn't enough. The banks need more capital and it's expected to be revealed today that they need an extra $40 billion. If that is the case, it'll mean that Ireland will have eventually pumped a staggering 45 percent of its GDP into its banks. So almost half the country's entire output for a year.
CHIOTAKIS: And where is this all headed Stephen?
BEARD: Well, the bailout money is borrowed by the Irish government is investors are now fretting about the government's debt a time when the country's in recession, unemployment's almost 15 percent, government revenues are falling.
The worry says Peter Thal Larson of the financial website BreakingViews, the worry is that Dublin won't be able to repay the loans, or perhaps even pay the interest on the loans.
PETER THAL LARSON: The suspicion is that if Ireland can't do that it will have to at some point in the next year or two, restructure its debt as well.
BEARD: And that means not paying some of it back.
BEARD: That means not paying some of it back.
That's the ultimate fear that Ireland will default and investors will stop lending to this and perhaps other governments in the Eurozone.
CHIOTAKIS: All right. Marketplace's Stephen Beard in London. Stephen thank you.
BEARD: OK Steve.