BoI raises €250m through bond issue

Bank of Ireland raised €250m through a 10-year subordinated bond with a coupon of 10%. The issue was up to four times oversubscribed.

“This follows on from the bank’s highly successful €1bn of 3-year un-guaranteed euro fixed rate Irish covered bond transaction in mid-November. The trade is a significant vote of confidence by international bond investors in Bank of Ireland and Ireland. This further reflects the material progress made by the Group and the economy.

The issue further supplements the bank’s capital position,” the bank said.

The last time Bank of Ireland undertook a similar trade was July 2008.

Owen Callan of Danske Bank said: “Given that this class of bond suffered significant losses during the crisis and was not protected by the Irish government, it’s encouraging that investors are willing to get involved in this market once again.”

“It’s another positive sign of how the banking system is inching out of the crisis and regaining market access.”

It was also revealed yesterday that the European Commission has extended the Government’s bank guarantee scheme until the end of June next year.

Last month the secretary-general of the Department of Finance, John Moran, said that the Government would apply to have the bank guarantee rolled over for another six months with the aim of weaning the pillar banks off the scheme during the first quarter of next year.

The Eligible Liabilities Guarantee (ELG) scheme has been in operation since 2009 and has to be renewed every six months. All deposits over €100k with the covered banks are included in the ELG.

However, the scheme costs the banks €1bn in fees every year, which is hampering the sector’s return to profitability.

The ELG is a continuation, although smaller in scope, of the State guarantee of the banking system in Sep 2008, which covered €440bn in liabilities. When the ELG is removed the State deposit guarantee scheme, which covers the first €100k in deposits will still be in operation.

© Irish Examiner Ltd. All rights reserved

More in this Section

N20 Cork to Limerick road upgrade an ‘immediate priority’

Investors should enjoy the calm before reality sets in

Macra president: Vital need to keep on top of market forces

Overseas buyers swoop for UK firms


Breaking Stories

Hands-on: Prisma and turning your photos into works of art

Gorilla Glass 5 hopes to end the days of cracked phone screens

Verizon set to boast one billion users with purchase of Yahoo

Nintendo's shares plunge after investors realise they don't make Pokemon Go

Lifestyle

Showbiz news: Miranda Kerr gets engaged to Snapchat founder

Ready to sticky rock and roll with the holiday treat that spans generations

New app helps tourists to get travel wise and avoid holiday disasters

Community action will help to slow down climate change

More From The Irish Examiner