Finance Minister Brian Lenihan turned Santa for the financial institutions this week with an announcement of a whopping €10 billion investment in the state's biggest banks and building societies.

The move - proportionately a vastly greater "gift" than the British government's £50 billion sterling bailout of the much larger U.K. banking sector - drew mixed optimistic and skeptical reaction.

Optimism was reflected in initial dramatic increases in the value of bank shares.

AIB shares were up 3.5% in the first hour of trading on Monday morning following the surprise government overnight announcement. Anglo-Irish shares were up almost 13% and Bank of Ireland almost 16.5%, while Irish Life and Permanent shares were up more than 5%.

But trading steadied as opposition politicians and financial experts began to question the lack of detail in the government announcement.

The government statement followed a seven and a half-hour meeting on Sunday at which Taoiseach (Prime Minister) Brian Cowen and Lenihan discussed measures to restore stability to the main Irish banks which lost more than €56 billion of their market capitalization since the stock market peaked in February 2007.

The statement said, "The state's investment may take the form of preference shares and/or ordinary shares and the state may where appropriate participate on an underwriting basis. In principle, existing shareholders will be expected to have the right to subscribe for new capital on the same terms as the government."

While the statement said institutions are being asked to submit their proposals "by early January," it was understood that the government expects to rapidly advance the recapitalization plan this week.

It was also understood that Lenihan believes there must be senior management changes in any institution supported by the state.

He said on Monday morning, "What I'm mainly concerned about is that the banks are in a position to extend credit.

"That's why we want to make this gesture, a demonstration of confidence in the banks, by upping their capital to show that their buffers are so strong they are indestructible."

Lenihan said there would be "tough discussions" with banks on the details of any state injection of funds.

The government plans to use money from the National Pension Reserve Fund, or another public source, to support existing shareholders and new private investors. Legislation underpinning the pension fund will be amended.

Ireland's largest business representative group, IBEC, welcomed the recapitalization announcement.

IBEC director general Turlough O'Sullivan said, "A strong and competitive banking sector is vital if Ireland is to succeed and prosper in these very challenging economic times.

"Given the unprecedented global financial turmoil and the knock-on effect that this is having on jobs and the wider economy, it is necessary for the government to take this decisive action."

But the main opposition political parties were skeptical.

Fine Gael described the government's plans as "sketchy." The party said they amounted to "little more than a re-statement" of intentions when the banking crisis exploded 10 weeks ago.

Fine Gael finance spokesman Richard Bruton said, "It seems designed more to buy time for the government than to actually get cash flowing again through our banks.

"Two and a half months after the announcement of the banks' guarantee, other countries are much further down the road in recapitalizing their banks than we are."

Bruton told RTE Radio's "Morning Ireland" current affairs program, "I think you'd have to reckon there's some anticipation of difficulties ahead, and the minister wants to make a pre-emptive move to try and bolster confidence. This doesn't yet represent a strategy."

But Bruton also conceded, "On a positive note, it does mean the minister has moved from the view he had where he would only put money into banks as a last resort."

The Labor Party's finance spokesperson, Joan Burton, dismissed the bank recapitalization move as a "non-decision."

She said Sunday night's announcement was "astonishingly short on detail" and showed "no determination to address this issue in a way that is decisive and confidence-building."

She added, "Any state investment or co-investment must be accompanied by conditions that will protect the taxpayers and give the State an upside once the banks return to profitability."

The fund is available to the institutions included in the €440 billion bank guarantee scheme an-nounced in September.

Financial analysts said the collapse in Anglo Irish Bank's share price last week forced the government to finally produce a recapitalization plan.