EU officially approves €3.5bn Bank of Ireland recapitalisation

The European Commission has today approved the €3.5bn state recapitalisation of Bank of Ireland in 2009.

"The Commission is satisfied that the plan is in line with its communication on the restructuring of banks during the crisis," said an EU statement.

"In particular, the restructuring plan foresees that BoI will pay a significant proportion of the restructuring costs, thereby limiting the distortions of competition. The plan furthermore ensures a sustainable future for the bank without continued state support."

Commission vice president in charge of competition policy Joaquin Almunia said: "I am confident that this plan will ensure a stable future for Bank of Ireland and contribute to financial stability in Ireland without unduly distorting competition.

"The good collaboration with the Irish authorities and the bank allowed us to achieve measures that will further open the banking market and facilitate entry and growth of market challengers."

The recapitalisation of Bank of Ireland of March 2009 was temporary approved by the Commission as emergency aid pending the submission of a restructuring plan, which is also approved today.

The Commission also concluded that the restructuring plan fulfilled the criteria of the Restructuring Communication (IP/09/1180).

Bank of Ireland is to reduce its presence in certain market segments through the transfer or winding down of assets and through divestitures, according to the plan.

"The bank will notably significantly reduce its presence in the UK corporate lending market after two of its current loan portfolios will be run down," said the EU statement.

"In Ireland, it will sell its New Ireland Assurance Company plc, its mortgage brokering business ICS Building Society and the 17% stake it owns in Irish Credit Bureau.

"In order to enhance competition, the bank will also offer certain services to new entrants or to small banks already active in Ireland to reduce the cost for competitors to develop business in Ireland.

"This comprises a 'Service Package', with back-up services and access to its ATM network, and a 'Customer Package' to help reduce the costs of acquiring new customers that involves Bank of Ireland presenting customers with alternative services for their current account and credit card products."

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