The Minister for Finance, Brian Lenihan has said the Government has not ruled out public investment in Irish banks, but said banks had to demonstrate a capacity to attract private investment.

Speaking on RTE’s this week, Mr Lenihan said the State putting money into the banking system would be a last resort and it was entirely legitimate that the taxpayer should not be asked to capitalise banks.

He said he had received a Government commissioned report confirming there was no threat to the solvency of banks in Ireland and that they could meet the current regulatory capital requirements.

Mr Lenihan also said he was not ruling out income tax increases over the next two years.

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