(Adds press report about merger plans)
By Andras Gergely
DUBLIN, Nov 20 (Reuters) - Irish Finance Minister Brian Lenihan said on Thursday he was talking to banks about reform measures to shore up credit supply in the economy, but he would not comment on reports of an impending recapitalisation plan.
Ireland was one of the first countries to respond to the credit crisis with a guarantee for bank liabilities worth some 440 billion euros ($550 billion), but it has not bailed out or nationalised any banks, and they have not raised equity themselves.
"The government is determined, on foot of the guarantee, which has stabilised the banking sector, to reform the banking sector," Lenihan told reporters. "The structured dialogue has to be constructive (and) it has the purpose to ensure that there is ample credit available in the Irish economy."
"I've no doubt that the banks will be anxious to cooperate," he said, declining to discuss details of the talks.
Prime Minister Brian Cowen said on Wednesday the government was keeping all options open on support for its banking industry, but he played down press reports of an imminent recapitalisation plan.
Public television RTE cited unnamed participants in the bank talks as saying the government believed consolidation could be the best solution, and that it could lead to an overhaul of the sector, which would eventually leave only two large players.
A finance ministry spokesman declined to comment on the RTE report.
Irish media have also reported that the government has received interest, especially from private equity groups, about co-investing in any government bank plan.
A finance ministry spokesman said "informal approaches" had been made by a number of investors without giving further details.
The Irish Independent newspaper reported, without citing sources, that Carlyle Group was looking into an investment. The private equity group was not available for comment.
The Irish Times and the Irish Independent both reported that Sandler O'Neill was believed to be advising another potential suitor. The U.S. investment bank was not available for comment.
"At a minimum, there is extensive work going on behind the scenes," said Goodbody Stockbrokers analyst Eamonn Hughes.
BUDGET CHANGES
Last month the country's four listed banks -- Bank of Ireland, Anglo Irish Bank, Allied Irish Banks and Irish Life & Permanent -- were among the six Irish financial institutions that signed up to the government's plan, which guaranteed all their liabilities for two years.
But pressure has increased on them to raise their capital levels to match those of European peers.
Cowen said on Wednesday banks would explore possibilities for meeting higher capital needs by raising capital privately and disposing of assets.
On Thursday, Lenihan confirmed changes to new taxes introduced in the 2009 budget in October.
The government is introducing an additional income tax of 1 percent on income above 250,120 euros per year, on top of the levies of 1 to 2 percent already announced in October.
In another measure already reported by Irish media this week, Lenihan tweaked an airport departure tax introduced in the budget to make it more favourable for regional airports in the west of the country.
The tax rate remains 10 euros per passenger for long and medium flights and 2 euros for shorter journeys. But the 2 euro rate will now apply to all Irish airports if the destination is 300 km or less from Dublin airport, such as to Manchester or Liverpool. (Reporting by Jonathan Saul; Editing by Erica Billingham, David Cowell, Toni Reinhold)