Promissory note warning by BoI

Bank of Ireland has warned of the possible negative effects that the Government’s scheme to delay repayments on the Anglo promissory notes could have on the bank.

In the circular sent to shareholders, the bank said that the swapping of bonds involved in the scheme could impact on the banks liquidity, if Ireland was to default on its debt obligations.

“The purchase of the bonds pursuant to the transaction will further increase the exposure of the bank to the risk of Irish sovereign downgrade or default. If the State defaults on its sovereign debt obligations, this would have a material adverse effect on the value of the bonds, and the bank could suffer a loss arising from the reduced value of the bonds, which could have an impact on the bank’s liquidity,” the circular said.