Ireland will inject $5.6 billion into Anglo Irish Bank

The Irish government said Friday it would inject up to 4.0 billion euros, or $5.6 billion, into Anglo Irish Bank, recently nationalized by Dublin, subject to European Union approval. The announcement came as Anglo Irish Bank reported a pre-tax loss of 4.1 billion euros in the six months to March compared to a year earlier. In January, Dublin took control of the bank, whose fortunes have tracked the rise and fall of the property-fueled Irish economy. The overriding concern of the government has been to protect the economy from wider losses as well as the bank’s 64 billion euros in deposits. Anglo Irish had specialized in lending to large real estate developers, which often used the financing to buy huge tracts of land, especially in the Dublin Docklands redevelopment. As property prices crumbled, its bad loans swelled. Investor confidence was also dented by a personal loan scandal that led to the resignations of its two top executives in December. Ireland was the first eurozone member to fall into recession as a result of the global financial crisis. Meanwhile Ireland's economic downturn in 2008-2010 threatens to be the worst for any industrialised country since the 1930s, the country's top think-tank said recently. Prime Minister Brian Cowen's government has brought in a series of emergency budgets and fiscal belt-tightening packages as it also struggles to deal with a ballooning deficit and a domestic property market meltdown. The economy is forecasted to shrink 8 % this year while unemployment would hit a 13-year high of 12.6 % and price deflation could reach 4 %.