The UK Telegraph reports British banks lost billions of pounds in value yesterday after the Irish bail-out was thrown into jeopardy over concerns that the country's government might collapse before a rescue deal can be agreed.
The share prices of Royal Bank of Scotland and Lloyds fell sharply as stock markets took fright at the political chaos engulfing Dublin.
It had been hoped that the £70 billion bail-out agreed between Ireland, the European Union and International Monetary Fund would ease investors' fears over the eurozone economies.
But within hours of the Irish government admitting it needed help, the Green party – on whom Prime Minister Brian Cowen relies for support – called for a general election by the end of January.The suggestion prompted a fall in the value of the London stock exchange and the euro and a rise in the cost of borrowing for both the Irish and Spanish
governments. The head of the eurozone warned that "crazy" market speculators could turn on Portugal and Spain next.
British banks have more than £140 billion in outstanding loans to Ireland. RBS has forecast it will have about £10 billion in "impaired" Irish loans next year. Lloyds is expected to write off more than £1.6 billion.
If the bail-out fails, further outstanding loans could be in doubt. Yesterday, shares in RBS fell by almost five per cent and Lloyds fell by more than four per cent.
Last night, Mr Cowen insisted he would negotiate the rescue deal before dissolving the Irish parliament and calling an election in January.
In an emergency statement to Parliament, George Osborne announced that the British Government would play a leading role in the international bail-out with a direct loan worth several billion pounds to Ireland. The loan will add to this country's record government debts.
More details here
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The share prices of Royal Bank of Scotland and Lloyds fell sharply as stock markets took fright at the political chaos engulfing Dublin.
It had been hoped that the £70 billion bail-out agreed between Ireland, the European Union and International Monetary Fund would ease investors' fears over the eurozone economies.
But within hours of the Irish government admitting it needed help, the Green party – on whom Prime Minister Brian Cowen relies for support – called for a general election by the end of January.The suggestion prompted a fall in the value of the London stock exchange and the euro and a rise in the cost of borrowing for both the Irish and Spanish
governments. The head of the eurozone warned that "crazy" market speculators could turn on Portugal and Spain next.
British banks have more than £140 billion in outstanding loans to Ireland. RBS has forecast it will have about £10 billion in "impaired" Irish loans next year. Lloyds is expected to write off more than £1.6 billion.
If the bail-out fails, further outstanding loans could be in doubt. Yesterday, shares in RBS fell by almost five per cent and Lloyds fell by more than four per cent.
Last night, Mr Cowen insisted he would negotiate the rescue deal before dissolving the Irish parliament and calling an election in January.
In an emergency statement to Parliament, George Osborne announced that the British Government would play a leading role in the international bail-out with a direct loan worth several billion pounds to Ireland. The loan will add to this country's record government debts.
More details here
Tell two friends about this blog
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