IMF and EU ‘may guarantee British sell-offs by Irish banks’

Ireland's crippled banks could sell off a host of UK assets with European and IMF guarantees for potential buyers under the terms of any bailout, it emerged today.

The option on the table, said to be under consideration by the European Commission, IMF and European Central Bank mission in Dublin, may see them offer to share losses with buyers for "non-core" assets such as AIB's UK loan book and Irish Life and Permanent's UK mortgage loans.

Simon Adamson, European banking analyst at CreditSights, said some form of indemnity was likely with the Irish banking sector, brought to the edge of the abyss by a property collapse, still unable to survive without ECB support.

"In some circumstances, it is just not possible to sell these assets," he said.

Billions of pounds in property loans used to buy trophy assets such as London's Connaught Hotel have already been bought up by Ireland's National Asset Management Agency and are set to be sold off.

One senior source at a leading property firm said: "We are concerned that there could be a lot of Irish property coming onto the market which could impact prices, although there is still a shortage of prime stock in London."

The mission in Dublin is expected to take up to two weeks to thrash out a rescue for the Irish economy, which faces a deficit soaring to 32% of GDP this year. The head of the Irish central bank has admitted a loan running "into tens of billions of euros" is needed.

Ireland is determined to draw a line in the sand in negotiations over its super-low corporation tax rate, which nations such as France and Germany want lifted, but there were fresh calls today for Dublin to reach a quick deal to prevent contagion spreading across the eurozone.

"We are now at a point where decisions have to be taken," said Greece's finance minister George Papaconstantinou told a European banking congress in Frankfurt. "Time is of the essence."

The IMF played down worries over the crisis spreading to other weaker nations such as Spain and Portugal but its head of fiscal affairs Carlo Cottarelli admitted "it may take up to 18 months for things to calm down".

Finance minister Brian Lenihan will publish the details of another brutal round of spending cuts under a four-year fiscal plan to save 15 billion (£12.8 billion) early next week, before a by-election on Thursday which threatens to reduce the government's already razor-thin majority.

EU sources said details of the rescue were likely to come "alongside or very closely after" Lenihan sets out details of the austere four-year spending squeeze.