British taxpayers have provided Ireland (OTC BB: IRLD - news) with a backdoor bail-out of more than £14bn via the Royal Bank of Scotland (LSE: RBS.L - news) and Lloyds Banking Group (LSE: LLOY.L - news) .
Almost one pound in every four injected into the two state-backed banks by the Government has gone directly into the Irish economy, the two lenders' subsidiary accounts show.
Between 2009 and 2011, RBS made "capital contributions" totalling €9.13bn (£7.6bn) to its Dublin-headquartered subsidiary Ulster Bank Ireland. Over the same period, Lloyds transferred £6.41bn to its Irish operation, Bank of Scotland (Ireland), before dissolving the business.
The total £14bn amounts to more than a fifth of the £65bn UK taxpayers injected into RBS and Lloyds in 2008 and 2009, and is expected to rise further. Analysts estimate that RBS transferred another £2bn last year.
RBS and Lloyds used the funds to write off billions of pounds of debt loaned to Irish commercial property developers and households in the "Celtic Tiger" boom years.
After the bubble burst, Ireland's banks brought the country to its knees and forced the government into a €67.5bn (£56.5bn) international rescue, including £7bn from the UK Government. Since the financial crisis, Dublin has injected €80bn into its banks and nationalised or part-nationalised six of them.
Together with the bank bail-outs, the UK taxpayer has propped up the Irish economy with at least £20bn, which will renew questions about how the Labour government handled the bail-outs in 2008-09.
Last week, Grant Shapps, the Conservative Party chairman, said Labour "massively overpaid", while Bank of England officials claimed the UK would never match the £10bn profit made in the US.
Sir Mervyn King, Governor of the Bank of England, also said last week: "The sad truth is, in 2008, the idea of focusing efforts on recapitalising the banking system was a UK idea. We got there first but, like many UK ideas, the Americans developed it faster and better." The US forced all major banks to take state money, buying the stakes at about half their book value. The UK paid roughly twice the US rate, taking positions in the three worst-affected banks RBS, Lloyds and HBOS.
A Treasury source said: "The Government judged that without a taxpayer injection the banks would have collapsed, with consequences for financial stability and people's money, and it judged that was an unacceptable risk to take. The Government was bailing out UK banks with global operations. Ireland was one international business, but not the only one."
Lloyds has also transferred about £856m to its Australian subsidiary and RBS has ploughed billions into its various global operations.
Lloyds and RBS declined to comment.