Ireland mulls taking building society stakes-report

DUBLIN, July 5 (Reuters) - The Irish government is considering taking stakes of up to 25 percent in building societies Irish Nationwide and EBS after they transfer soured property loans to a "bad bank" scheme, a newspaper reported on Sunday.

The Sunday Tribune, without citing any sources, said Dublin was looking was looking at using a form of loss-bearing capital called "profit participating deferred shares", similar to the preference shares put into Allied Irish Banks (ALBK.I: Quote, Profile, Research) and Bank of Ireland (BKIR.I: Quote, Profile, Research), for the building societies.

The capital injection would enable the building societies to absorb large write-downs on the property assets when they are transferred to the National Asset Management Agency (NAMA), which is set to be formally established in the autumn.

No one from the Department of Finance was immediately available to comment on the report.

The Sunday Tribune also reported that the six financial institutions covered by an Irish government guarantee scheme may have to pay up to five times more for state protection once a bill extending the scheme beyond the end of September 2010 for some liabilities is passed.

Citing sources, the newspaper said the government was planning to raise the amount it charges banks to reflect the longer five-year term for guaranteed new debt issues.

Senior banking sources told the newspaper that the government may apply the new rate retroactively to cover the 11 billion euros banks raised under the original scheme.

(Reporting by Carmel Crimmins; editing by Simon Jessop)