DUBLIN, IRELAND - IRELAND will support a recapitalisation of its financial institutions of up to 10 billion euros (S$20 billion), the government said on Sunday.

Ireland was one of the first countries to respond to the credit crisis with a two-year guarantee for bank liabilities worth some 440 billion euros, but it has not bailed out or nationalised any banks, and they have not raised equity themselves.

'The government has decided either through the National Pensions Reserve Fund or otherwise and subject to terms and conditions, to support, alongside existing shareholders and private investors, a recapitalisation programme for credit institutions in Ireland of up to 10 billion euros,' it said in a statement.

Pressure has grown on the country's institutions, which include its four listed banks, to shore up their balance sheets in line with European peers.

Speculation has grown in recent weeks about potential investment in the Irish banking sector with interest expressed from private equity and other groups.

'The state's investment may take the form of preference shares and/or ordinary shares and the state may where appropriate participate on an underwriting basis,' the statement said.

'In principle existing shareholders will be expected to have the right to subscribe for new capital on the same terms as the government.' The government said institutions continued to work on their proposals for private investment.

'Institutions are being asked to submit their proposals by early January,' it said.