Bank won’t rule out state takeover

BANK of Ireland boss Richie Boucher refused to give odds on the prospects of the group avoiding a full takeover by the state in the months ahead.

At a news conference yesterday, Mr Boucher said if reporters wanted odds on that, they should go to Paddy Power.

Surviving nationalisation is seen as a requirement if Mr Boucher is to retain his position as chief executive of the group.

Pressure on Bank of Ireland’s executive team mounted after the March 31 stress tests concluded that the bank had to raise a further €4.2 billion, including a regulatory buffer of €0.5bn plus a further €1bn using convertible debt.

When the new tougher capital requirements were revealed, Central Bank governor Patrick Honohan said he believed the tougher demands would result in all of the Irish banks moving into state ownership.

Questioned about that, Mr Boucher said that, in effect, the bank is currently taking advice to see if it can, through the sale of other assets and independent financial backing, achieve the targets set.

The Government has given the group until early summer to raise the funding independently and Mr Boucher said that, given the pressure on the bank, the funding will have to be done within that time frame.

The bank has sold off BIAM and a number of other small non-core subsidiaries in an effort to achieve a size acceptable to the European Central Bank and the Financial Regulator.

That part of the process has been outlined but the problem for Bank of Ireland is that the new capital guidelines require it to find another €4.2bn to bring its balance sheet into line with the tougher PCAR guidelines.

Mr Boucher said the bank has taken “decisive steps” to stabilise the group and has achieved progress on a range of “critical strategic issues”.

However, he was unable to give any guidance on how the bank proposed to plug the €4.2bn hole to keep it out of the clutches of the state.

The bank has a non-core loan portfolio of €39bn and risk weighted assets of €22bn that are potential cash generators.

These are spread across commercial investment property portfolios as well as some niche businesses in project finance and corporate banking portfolios that can potentially be sold on.

Mr Boucher refused to say if his job was on the line if he failed to keep the bank independent and that his focus from here on was to work with his colleagues on the job at hand.