EBS Building Society, the State's biggest customer-owned lender, will probably get government capital by early next year to cushion losses on impaired loans to developers, chief executive Fergus Murphy said.
EBS needs about €300 million, which will boost its capital ratio to about 7 per cent, Mr Murphy said in an interview in his office in Dublin yesterday.
It will transfer about €927 million of development and associated loans to the National Asset Management Agency (Nama).
Mr Murphy is the only chief executive of an Irish lender to keep his job in the current banking crisis.
Mr Murphy, who joined EBS three years after it accelerated lending to property developers in 2005, said there was a "lot of pressure" on the company to join the property boom that has turned sour in the last two years.
"Their heart was in the right place but their timing was pretty awful," he said. "We are living with the consequences of that now." While Mr Murphy remained in his role, chairman Mark Moran and finance director Alan Merriman resigned, which EBS said in March was to demonstrate "accountability and responsibility."
"Given assets are moving into Nama during the first quarter of 2010, late 2009 ideally or the first quarter of 2010 would be when the capital would come," he said.
EBS can remain independent with the aid of the State capital, Mr Murphy said, though he is open to talks with other lenders about a "third force" in Irish banking by merging with the smaller Irish Nationwide Building Society and the banking unit of Irish Life & Permanent.
"Government and market forces may require that EBS becomes involved in something bigger," he said. "There are no talks going on, there is no discussion happening right now."
Bloomberg