Ireland's big three banks have been handed a €7.5 billion state bailout on far better terms than the equivalent £37 billion package handed to Royal Bank of Scotland, HBOS and Lloyds TSB by the British Government.

But Dublin also appears to have won greater commitments from its banks to increase their lending to consumers, homebuyers and small business during the recession.

"I always made it clear that I wouldn't rush a recapitalisation," said Brian Lenihan, the finance minister. "Other countries have proceeded in haste and made mistakes."

Ireland became the first country in Europe to guarantee all savers' money when the government stepped in on 30 September.

Dublin will invest €2 billion in new preference shares in each of the country's two largest banks, Bank of Ireland and Allied Irish Bank.

These shares will pay interest of 8% a year and give the government 25% voting rights on key issues. Both banks have committed to raise a further €1 billion from existing shareholders through rights issues underwritten by the government.

The smallest bank - Anglo Irish Bank - is in effect being nationalised with the state taking a 75% stake in return for €1.5 billion of preference shares. Anglo was swept by scandal last week after its chairman Sean FitzPatrick resigned when it was revealed he had taken €87 million of secret loans from the bank.

The interest rate Anglo must pay on its preference shares is higher at 10%, but still below the 12% charged by the British Government.

"I think this is substantially better terms for the banks and their shareholders than we have seen in the UK and they've obviously learned lessons," said Kevin McConnell, head of research at Bloxham Stockbrokers.

Lenihan said he had studied other bailouts and decided he had to hit a balance: "I didn't want to charge too high a price to restrict lending."