Ireland says looking at all options on banks

By Andras Gergely and Jonathan Saul

DUBLIN (Reuters) - The Irish government is keeping all options open on support for its banking industry, Prime Minister Brian Cowen said on Wednesday, playing down media reports of an imminent recapitalization plan.

"International market expectations in relation to capital levels in the banking sector have altered and ... meeting these expectations may be challenging," Cowen said, adding that there was no single solution to the problem.

The banks will explore possibilities for meeting higher capital needs by raising capital privately and disposing of assets, Cowen told deputies during a parliamentary debate.

The central bank said it had held talks with the finance ministry and the financial regulator on Tuesday night and the Irish Independent newspaper said the government intended to inject public money into the banks. The finance ministry declined to comment.

"The pace of something happening has stepped up a gear," said Anna Lalor, analyst at Goodbody Stockbrokers.

Shares in Irish banks soared after the Irish Independent report, reversing some of their recent heavy losses.

"It's very much retail investors buying into speculation in the press today of some sort of restructuring of the Irish banks," a Dublin-based trader said.

Ireland was one of the first to respond to the credit crunch with a guarantee for bank liabilities worth some 440 billion euros ($556 billion), but it has not bailed out or nationalized any banks, and they have not raised equity themselves.