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News : Irish Last Updated: Apr 1, 2010 - 8:10:46 AM

Bank of Ireland reports loss of €1.8bn for the nine months to December 31, 2009 after bad debt charges of €4.1bn
By Finfacts Team
Mar 31, 2010 - 6:50:21 AM

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Bank of Ireland was founded in 1783 and the former premises of the defunct Irish Parliament at College Green, Dublin, were purchased for £40,000 in 1803.

Bank of Ireland today reported a loss of €1.8bn for the nine months to December 31, 2009 after bad debt charges of €4.1bn.

BoI’s underlying operating profit (before impairment charges on loan assets) was €1.0bn for the nine month period (the bank has changed its year-end from March 31st), down 28% from the comparable nine month period ended December 31, 2008. A bad debs charge of €4.1bn on loan assets (of which €2.23bn relates to assets expected to transfer to the National Asset Management Agency (NAMA) and €1.82bn to non-NAMA assets) resulted in thegGroup recording a loss before tax of €1.8bn and an underlying loss before tax of €2.97bn  for the nine months ended 31 December 2009.

The Irish 'bad bank' National Asset Management Agency (NAMA) said on Tuesday that it will acquire over 1,200 individual toxic property loans with a nominal value of €16bn for a consideration of €8.5bn, representing an average discount or 'haircut' of 47%. It completed the transfer of the initial tranche of loans from Irish Nationwide Building Society and EBS Building Society on Monday, March 29th.

NAMA said it will transfer the first batch of loans from Bank of Ireland on Friday next, 2nd April and the discount on the initial BoI transfers with a book €1.93bn will be 35%.  The agency expects to complete the acquisition of the first tranche of loans from the two remaining participating institutions - Allied Irish Banks Plc and Anglo Irish Bank – by early April. NAMA expects to complete the transfer of the remaining loans from all five institutions by the end of the year and no later than end February 2011, the deadline set by the EU Commission. In total, the agency anticipates that it will purchase €81bn of loans.

The Minister for Finance Brian Lenihan told the Dáil on Tuesday that Bank of Ireland will require €2.7bn in new capital, but it is hoping to meet much if this from private sources. The total in capital required by the Irish banks will be at least €32bn.

The public stake in BoI may rise to 40%.

Richie Boucher. Group Chief Executive commented: "We have conducted an extensive internal review of our impairment estimates on our non-NAMA bound loans and advances to customers. The outcome of this review is to confirm that the outlook for impairments on our non-NAMA bound loans remains as expected and we confirm our previous guidance of an impairment charge for these loans of €4.7 billion over the 3 years ending March 31, 2011. We believe that the impairment charge on our non-NAMA loans and advances to customers has peaked in 2009 and will reduce progressively in each of 2010, 2011 and 2012.

We prioritised the gathering of customer deposits in the nine months ended  December 31, 2009 which have increased by 2% to €85bn since March 31, 2009. In addition we have reduced the quantum of our wholesale funding to €61bn at  December 31, 2009, down from €74bn at March 31, 2009. We also extended the maturity profile of this wholesale funding with 32%, at December 2009, having a maturity profile of one year or greater compared to 27%, at March 2009. Taking account of the deleveraging initiatives outlined above, the Bank is targeting a Group loan / deposit ratio of less than 125% by December 2012."


The ratio of loans and advances to customers - incl. assets held for sale to NAMA / customer deposits  was 152%, down from 161% in the prior year; loans and advances to customers - excl. assets held for sale to NAMA / customer deposits was 141%

In a separate statement, to the Stock Exchange, the bank said it "believes that raising €2.7bn will be sufficient to meet its capital requirements," and it "believes that it has a robust investment case to enable it to raise a substantial amount of the incremental capital required by the Financial Regulator from private sources, including existing shareholders."

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