BoI secures EU approval to get government help

BANK of Ireland has won EU approval for government help after it agreed to reduce reliance on wholesale funding and focus on “balanced risk” lending in Britain and Ireland.

The European Commission authorised Irish Government recapitalisations, guarantees and asset relief after the bank made plans to “substantially deleverage its balance sheet to reduce its dependency on wholesale funding”, exit risky portfolios and implement better risk management, regulators said. The bank will also offer services to small Irish banks to reduce rivals’ costs.

“Bank of Ireland has embarked on an ambitious plan to downsize and refocus its activities to better serve the Irish economy,” EU Competition Commissioner Joaquin Almunia said in the statement.

“This plan has attracted private investors and significantly reduced the need for public support.”

Regulators must approve large state payments to lenders that needed help during the financial crisis and has required banks to shrink balance sheets and change the way they do business to compensate for any harm to competition.

Bank of Ireland and AIB require “close surveillance” because they will control the Irish market after receiving bailouts, Mr Almunia said in June.

The bank said in June that it intended to reverse plans to sell its ICS Building Society unit under its revised EU restructuring programme. It also said it would delay the sale of its New Ireland life assurance unit. The EU ordered the bank to sell both divisions as part of its original restructuring blueprint, approved in July 2010.

Bank of Ireland said it “continues to make good progress in implementing the commitments” of its restructuring plan.