BoI success in capital raising round but challenges remain

WITH the successful 95% take-up of its rights issue, Bank of Ireland may have successfully wrapped up its €3.56 billion capital raising round; but challenges still lie ahead – particularly with the international funding environment remaining tough, with term-debt markets still closed for most European banks.

This, according to Ciarán Callaghan of NCB Stockbrokers, along with the risk of the losses on some of its non-NAMA-bound loans remaining high, are “the two biggest headwinds left facing Bank of Ireland”.

“The regulator’s comprehensive stress-testing of the banks’ balance sheets should ensure the sector is adequately capitalised by the year-end to cope with the latter. However, the former may prove to be more difficult to overcome in light of the structural loan-to-deposit imbalance facing the Irish banks,” he said.