Ireland’s banks need $43bn in new capital after “appalling” lending decisions left the country’s financial system on the brink of collapse.

The fund-raising requirement was announced after the National Asset Management Agency said it will apply an average discount of 47% on the first block of loans it is buying from lenders as part of a plan to revive the financial system. The central bank set new capital buffers for Allied Irish Banks and Bank of Ireland and gave them 30 days to say how they will raise the funds.

“Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.”