THE GOVERNMENT sent the private equity firms packing when they arrived at the height of the banking crisis in 2008 looking to snap up one or two struggling Irish banks for bargain prices.

Cardinal Capital Group, the firm led by Nigel McDermott and Nick Corcoran, former executives at Dermot Desmond’s firm IIU, were among those interested.

They jointly led the Mallabraca group which eyed possible investments in Bank of Ireland and Irish Life and Permanent.

More than two years on, five lenders have been part or fully nationalised and the Government is seeking a buyer for one of these institutions to avoid a further bill of at least €438 million.

With €46 billion of State cash already in the banks – and yet more to go in – choosing the Cardinal-led consortium (now with different players) as the preferred bidder for EBS makes sense.

It sends out a strong message that the Government – unlike in 2008 – is open to foreign capital now it is crystal clear that they cannot afford to save its banks.

The proposal from the other final bidder for EBS, Irish Life and Permanent, would have involved yet more State cash for the lender.

Central Bank governor Patrick Honohan has said the banks are for sale. EBS shows that the State is willing to proceed to a deal with outside investors, which tallies with Fine Gael’s stated position.

If Cardinal ink a deal, it will bring in investors of the calibre of US billionaire Wilbur Ross, which may encourage other buyers into the country at a time when bank assets and property must be sold.

The consortium is willing to invest at least €600 million in EBS to boost capital against losses. If they buy it, they will have to grapple with the tricky issue of rising mortgage defaults. Ross told The Irish Timeslast November that debt forgiveness would only be considered in limited cases or not at all.