Income from Irish bank bailout swallowed up by debt costs

DUBLIN, Sept 29 (Reuters) - The income Ireland (Other OTC: IRLD - news) has generated from investing 67 billion euros ($75 billion) in its financial sector at the height of the banking crisis has been almost completely offset by servicing the associated debt, the state's auditor said on Tuesday.

At almost 40 percent of gross domestic product, Ireland's bank bailout was the most expensive in the euro zone and the government has begun to recover some of its investments as the economy recovers and banks return to profit.

The bailout has also been generating income from preference share dividends and fees paid for the provision of state guarantees on deposits and these totalled 10.4 billion euros by the end of last year, the Comptroller and Auditor General said in a report.

However the almost 9 billion euros of estimated debt servicing costs associated with the investments almost offset the net income, the report said.

The Comptroller and Auditor General said the estimated 2.3 billion-euro cost for 2015 of servicing the debt will be offset by income earned on the debt which the country's central bank acquired relating to the liquidation of the former Anglo Irish Bank.

The government has said it expects to fully recover the 30 billion euros of capital put into Allied Irish Banks (EUREX: 558453.EX - news) , Bank of Ireland (EUREX: 1269463.EX - news) and permanent tsb - lenders that survived the crisis - but will not recoup the 36 billion euros pumped into Anglo Irish Bank. ($1 = 0.8887 euros) (Reporting by Padraic Halpin; Editing by Greg Mahlich)