The Irish government last night announced an investment totalling €5.5bn (£5bn) in its three main banks, which will see it take an effective 75% controlling stake in the Anglo Irish Bank.

The investment is in the form of perpetual preference shares, with the government putting €2bn into each of Bank of Ireland and Allied Irish Banks, both of which have retail operations in the UK, in return for an 8% coupon.

The Irish government will also make a €1.5bn investment in Anglo Irish, which suffered the resignations of both its chairman and chief executive last week over a directors loans affair, but will charge a higher coupon of 10%.

Financial Times