On February 11 the Minister for Finance announced the terms of a recapitalisation package for AIB and Bank of Ireland (BOI). The Government are to provide €3.5 billion in Core Tier 1 capital to both banks in return for €2 billion of perpetual non-convertible preference shares with a fixed annual dividend of 8%.

 The €7 billion investment in AIB and BOI is to be funded by the National Pension Reserve Fund. To this end, the Investment of the National Pensions Reserve Fund and Miscellaneous Provisions Bill 2009 was published last Friday, 27th February. The purpose of the Bill is to amend the existing National Pensions Reserve Fund Act 2000 to allow the National Pensions Reserve Commission to make investments in the public interest in credit institutions and to underwrite or otherwise support the issue of securities by such listed credit institutions.

 The full text of the Bill can be viewed here