On Friday, the Government published a Bill to make it possible to use the National Pensions Reserve fund to recapitalise the banks.
The Bill enables the Minister for Finance to give directions to the National Pensions Reserve Fund Commission to invest in listed credit institutions or to underwrite their share issues.
The background to the Bill is the Government's announcement on 11 February 2009 of the proposed recapitalisation terms to be offered to Allied Irish Bank and Bank of Ireland. Under the proposals, the Government will provide €3.5 billion in core tier 1 capital for each bank.
Of the total €7 billion, €4 billion is to be funded from the National Pensions Reserve Fund's current resources while €3 billion will be provided by means of a frontloading of the Exchequer contributions to the Fund for 2009 and 2010.