Zombie bank Anglo Irish may cost the Irish taxpayer far more than the $30 billion so far set aside.
Anglo Irish Bank formerly run by now bankrupt Sean FitzPatrick was at the center of the property collapse leaving billions in bad loans in its wake.
The new crisis has emerged despite assurances by the government that the Anglo bill would not come to more than the $30 billion figure.
However, the Department of Finance has now admitted that there was a ‘significant risk’ that the Anglo bill will rise even further.
“Because of the uncertainty facing the bank, there is a significant risk that further capital will be required by it in the future," the department said.
That is because Anglo loans, transferred to the government National Assets Management Agency (NAMA) are performing far more poorly than expected.
The first $11 billion in loans were transferred with an expectation that 55 per cent of the cost could be written off. That now seems optimistic however.
The total amount of loans will be close to $42 billion with the government assuming that $30 billion would cover the non-performing parts. They appear to have underestimated however.
Critics are now raising the specter of a black hole swallowing billions more at a huge cost to the hard-pressed Irish taxpayer.
Fine Gael enterprise spokesman Richard Bruton has expressed outrage at the situation.
"It is intolerable that scarce taxpayers' money is being continuously poured into a bank that will never lend a red cent to business and will form no part of Ireland's economic recovery," Bruton said.
"It is now critical that NAMA ceases purchasing loans from Anglo, because as the losses on these loans crystallise the need to pour more capital into the bank arises, merely adding to the problem and tightening the noose around the already overburdened taxpayers' necks.
"As was stated by Anglo chief executive Mike Aynsley, the 'lion's share' of the money being put into Anglo would 'never be seen again' and it would 'end up in a black hole'. That represents a depressing reality for the taxpayer, who is being subjected to increased energy charges, multiple levies and a Government that has no jobs plan," he said.
Labour's finance spokeswoman Joan Burton said Anglo had become the "hole that keeps on growing".
"It's taxpayers who are on the hook for these vast sums of money," she stressed. "It's a bottomless pit that keeps getting deeper.
These are just vast sums of money and an honest and independent assessment of the bank is urgently needed."
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