Ireland to accelerate shrinking of banks: report

Ireland's banks should speed up the pace of shrinking in order to continue to access emergency European funding, the Financial Times reported yesterday.

The banks will have to sell tens of billions of euros worth of legacy loans in a matter of months, the paper said citing people briefed on the details of Ireland's last week's international bailout.

The old 'Celtic Tiger' has resorted to a €85-billion bail-out by the European Union (EU) and the International Monetary Fund (IMF) to keep afloat its plunging economy, battered by the debt crisis triggered by the nation's banks. (See: Ireland succumbs to EU, IMF on €85-bn bailout)

''The deleveraging has to go fast. That was part of the deal to keep European Central Bank (ECB) funding,'' said a person involved in the discussions, according to the FT.

The nation's two leading banks, Bank of Ireland and Allied Irish Banks combined have about €200 billion in their loan books, would be most affected.

The ECB has been a major provider of short-term loans to the Irish banks during the crisis. In October alone, the nation's banks took €130 billion from the ECB, the highest for any euro zone country.