SCOTCHSTONE CAPITAL, the Malta-based investment firm leading the shareholder revolt at Irish Life & Permanent, has told Minister for Finance Michael Noonan that it can recapitalise the bank by raising funds from private investors.

In an open letter it says it will fight a move by Mr Noonan to apply to the courts to recapitalise the bank using public money.

The Minister is expected to imminently make such an application which will wipe out the value of investors’ shareholdings.

“There is still time to avoid costly litigation that is not in the interest of the Irish taxpayers or the IL&P shareholders,” Scotchstone managing director Piotr Skoczylas writes.

“Within 30 days we will find private investors to participate in the IL&P recapitalisation, which will ease the burden for the Irish taxpayers. Do not obstruct this process.”

Mr Skoczylas, who has been elected to the IL&P board, said it was “critically important” the Government “respect the democratic vote” of shareholders who voted to reject the recapitalisation.

The firm believes the recapitalisation deadline of July 31st is “arbitrary”, and that IL&P only requires €1.4 billion in capital based on stress-test scenarios formulated by the European Banking Authority. More stringent Central Bank stress tests state the bank needs up to €3.8 billion.

Mr Skoczylas added that this was his fourth letter, and that the previous letters had been “completely ignored”.

IL&P, which has made multiple attempts to raise private finance to avoid being nationalised, did not comment on Scotchstone’s letter.

A spokesman for the Department of Finance said the recapitalisation deadline of July 31st was a requirement of the EU-IMF bailout, and the Government intended to meet this condition.

He said the capital levels were set under Central Bank rules, which must be followed in order to be eligible for liquidity finance from the European Central Bank.

He added that the department had responded to Scotchstone’s legal representatives regarding the previous letters and would respond similarly to this letter.

The letter is also addressed to Central Bank governor Patrick Honohan, National Treasury Management Agency chief executive John Corrigan, the secretary general of the Department of Finance Kevin Cardiff and the ILP board.