Brussels, 20/07/2011 (Agence Europe) - The European Commission granted temporary approval on Wednesday 20 July to a recapitalisation worth up to €3.8 billion for Irish Life & Permanent Group Holdings (IL&P) by the Irish authorities. This measure is necessary to increase the bank's solvency ratios, thereby enabling it to resist potential stress situations and preserving stability on the Irish financial markets. A final decision will be taken after the Irish state presents a new restructuring plan, promised by the end of the month, to ensure a return to long term viability of the bank, adequate participation in the restructuring costs by shareholders and subordinated debt holders and proper measures to limit the distortion of competition created by the state support. The recapitalisation was agreed after assessment of prudential own funds which identified capital needs of €4.0 billion. It will be carried out in two stages: firstly, the Irish state will purchase ordinary shares in IL&P for €2.3 billion and contingent capital notes for €0.4 billion; then the state will provide up to €1.1 billion of additional Core Tier 1 capital if the capital raising measures recently launched by IL&P fail to raise the remaining amount of capital. €200 million of capital will be provided by the group itself. The capital raising measures include liability management exercises, consisting of debt for cash offers and the sale of the group's life insurance business. Some shareholders rejected the plan which will result in virtual nationalisation of the bank and its being broken up. (F.G./transl.rt)