THE HEAD of US buyout firm JC Flowers, which invests in distressed financial institutions, has said he would like to invest in Ireland if bank assets and loan portfolios are sold with sufficient Government guarantees on future banking losses.

Christopher Flowers, the former Goldman Sachs executive, said his company may be interested in buying a stake in Bank of Ireland or Allied Irish Banks, depending on Government guarantees on potential further losses.

Shares in Bank of Ireland rose 13 per cent, or 4 cent, to 36 cent, while AIB gained 10 per cent, or 3 cent, to 38 cent on the back of the company’s renewed interest.

Buying loans at discounts with support from the Government might be a more appealing investment in the short term, Mr Flowers told the Financial Times.

The Government said the banks would be required to run down or sell non-core assets or loan portfolios and that guarantees or “credit enhancements” would be offered to share losses to make the assets more attractive to buyers.

The plan, which is part of the aid package agreed with the European Union and the International Monetary Fund, aims to shrink the size of the Irish banks, bringing loans closer in line with deposits so they can stand on their own and make them more attractive to buyers.

JC Flowers, which had previously eyed investments in Bank of Ireland and building society EBS, is watching developments in Ireland with interest.

Mr Flowers said the euro zone was likely to offer investment opportunities but warned that any investor interested would be “pretty brave” to move into Ireland or Spain.