THE HIGH COURT has granted the Minister for Finance a court order to inject almost €3.8bn of taxpayer funds into Irish Life & Permanent.

The application to the court came after shareholders in the lender last week voted to block the move, which nonetheless sees their shareholding diluted to less than 1 per cent.

In a statement, the Department of Finance said its action was necessary to ensure that IL&P had been recapitalised in accordance with the banking stress tests published in March.

Around €2.9bn of the funds being injected by the State had to be injected before the end of July under the terms of those Central Bank tests and of the EU-IMF deal, it said.

The Department said it was willing to engage with private investors who wanted to help dilute its shareholding, “but in view of the pending deadline at the end of this week as set out in the EU–IMF Programme of Assistance, we have no option but to proceed to a direct recapitalisation of the banks by the State.

“The Government and the Central Bank considers the additional capitalisation of IL&P is essential to strengthen the capital position of that entity, the stability of which is essential to the maintenance of financial stability in the banking sector in Ireland,” it added.

The government is expected to proceed with plans to sell off the company’s life assurance business, Irish Life, leaving only the banking arm of Permanent TSB.

The deal comes on the same day as AIB shareholders vote on a deal to dilute their own shareholding in the bank to less than 0.2 per cent.

Previously: IL&P shareholders raeject plans for state funding >