Government forced to use funds from National Pensions Reserve to save Ireland's largest bank from collapse.

Allied Irish Banks (AIB) is now effectively nationalised after the Irish Government had to inject a further €3.7 billion of capital to rescue the bank.

AIB, which is still suffering losses on bad loans from the property boom, had been unable to attract sufficient finance from private investors.

The rescue, approved in December 2010, means the Irish Government will effectively own 96% of the bank by February 2011.

AIB, which has so far received a total of €7.2 billion from the Irish Government, had a market value of just €432 million in December 2010.

Once Ireland's largest bank, AIB was the fourth of Ireland's called 'Big Six' financial institutions to be nationalised following Anglo Irish Bank, Irish Nationwide and EBS Building Society.