THE EUROPEAN CENTRAL BANK and International Monetary Fund will require the government to take a majority share in Bank of Ireland under the conditions of its bailout package for Ireland, which reportedly amounts to €85bn.

RTÉ News reports that the total value of the fund – which would be set aside and made available to Ireland on a contingency basis, to be drawn down as needed – is being made available on the condition that the banking sector would see significant reform.

In particular, the level of capital being held by the Irish banks – the amount of money the banks need to keep in reserve, as a proportion of the amount given out in loans – will be increased from 8% to 12%, with an absolute minimum of 10.5% to be kept on hand at all times.

In order to ensure that the banks abide by those conditions, the government would be force to recapitalise both to the tune of billions – increasing its 36% stake in Bank of Ireland to over 50%.

Its control of Allied Irish Banks, meanwhile, would expand to at least 99.9%; RTÉ suggests that the state was reluctant to have to take the bank into full national ownership.

EBS Building Society – which is still owned by the government, though the state hopes to sell it off shortly – will also need new funding, as will Irish Life & Permanent. Anglo Irish Bank and Irish Nationwide will not be required to abide by the conditions, however, as they are already set to be wound down.

As part of the plan, the state is likely to immediately take a majority of bad loans out of AIB’s British operations, hoping to help the bank sell off its UK arms. The sale of those operations – which include First Trust Bank in Northern Ireland – had been shelved earlier this month, when the bank failed to attract bids within its desired range.

The Irish Times reports that executives from the three Irish Stock Exchange-listed financial institutions – AIB, Bank of Ireland, and Irish Life & Permanent – were among the first to meet the European and IMF officials when they arrived in Dublin last week, as part of the moves to identify exactly how much new capital each would require from the fund.

Other banks, it says, are expected to meet with the officials in the coming days.

The government told the BBC that RTÉ’s report on the size of the package – suggested as being €85bn – was “premature”.