Michael Somers, former chief executive officer of Ireland’s National Treasury Management Agency, told the Irish Times the cost of bailing out the country’s banks could reach 40 billion euros ($52 billion).
The 20 billion euros in the country’s pension reserve could meet half of the cost of the banking crisis, showing Ireland “didn’t blow the whole of the boom,” Somers said in an interview with the newspaper today.
“We have an immediate problem that we have got to get out of,” Somers is quoted as saying. “When we get out of it, it is going to be a question of building up a war chest again. This is like the aftermath of a war: you are left with a lot of debt after a war, and that’s where we are.”
The Irish government so far has injected almost 33 billion euros into banks and building societies, with two-thirds of that going to Anglo Irish Bank Corp. Somers, who ran the NTMA for nearly two decades until he retired in November, said he “informally” raised concerns about the surge in Irish bank lending during the property boom to a senior official at the Department of Finance two or three years ago.
The sale of Allied Irish Banks Plc’s Polish unit this month was “most unfortunate,” Somers said, though he added that the bank’s problems are “manageable.” Somers also said he was “absolutely shocked” when he discovered the amount Anglo Irish had loaned to a small group of developers.