Paul Sreenan, counsel for the bank, yesterday applied to Mr Justice Peter Kelly to transfer the bank’s petition for the fund reduction to the Commercial Court.
The court was told the reduction has no adverse implications for the bank’s solvency, will not prejudice the rights of its creditors or members, and, after reduction, the balance in the stock premium account would be €4.299 billion.
The judge made directions for the advertising of the petition and fixed the matter for hearing on November 26.
In an affidavit, bank chief executive Richie Boucher said that, following recapitalisation of the bank by the Government in March 2009 and further capital raising measures undertaken by BoI in March 2010, the Irish National Pensions Reserve Fund Commission holds 1.83 billion units of preferred stock in BoI, carrying a dividend entitlement of 10.25% per annum.
The current capital stock of the bank was €1.21bn and its stock premium account was €5.099bn.
As a result of the financial performance of BoI at December 31 last, the unconsolidated balance sheet did not contain sufficient distributable reserves to enable the directors declare, if they chose to do so, the next discretionary cash dividend on preference stock held by the fund due in February 2011 and on other preference stock previously issued by BoI, Mr Boucher said.
If the next instalment of the cash dividend was not paid in full, the NPRFC would become entitled to an issue of units of ordinary stock at least equal to the value of the cash dividend and this would materially dilute the proportionate stockholding of the other ordinary stockholders in BoI, Mr Boucher added.