March 21, 2011 / 3:59 PM / 9 years ago

Ireland may need over 35 billion euros for banks - EU sources

BRUSSELS (Reuters) - Ireland may need more than the 35 billion euros (30.5 billion pounds) already set aside to recapitalise its banks, several euro zone sources said on Monday, adding that the EU stood ready to provide more if Ireland needed.

Ireland has already set aside 10 billion euros for its over-extended banks and in theory has a further 25 billion available as part of its EU/IMF bailout package to support the sector, but the sources said it may not be sufficient.

“When you are asking your creditors (the EU) for additional efforts and when you are telling them that your situation is actually worse than what justified the original loan, a series of questions emerge,” a senior EU financial source said of Ireland.

“I would remind you that after the last stress tests, Ireland said there was no problem. Four months later, they needed 35 billion euros,” he said.

Another source, an EU diplomat, added: “Everybody has doubts about whether the (existing) programme is sufficient and if there are still more problems with the banks.”

The sources said that if Ireland needed more, the EU stood ready to provide it — as long as Ireland was willing to give more details on the restructuring needs of its banks.

“Without a doubt, if there’s a need for extension to reassure on their financial sustainability, Europe is ready to do its bit,” the first source said.

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