At an extraordinary general meeting yesterday in Dun Laoghaire, shareholders voted 99.98% in favour of the institution acting as the refinancing mechanism of the bond being paid to the Irish Bank Resolution Corporation (IBRC) — formerly Anglo — instead of its latest cash payment.
As announced in March, the Government is paying the IBRC a 13-year bond instead of this year’s €3.1bn tranche of an overall €30bn investment. Bank of Ireland is financing this deal and stands to make a profit of nearly €39m on the interest on the transaction.
The Government is hoping to strike a longer- term deal with the ECB, over satisfaction of the Anglo payments.
At Bank of Ireland’s annual general meeting in April, management came in for more criticism — with accusations of poor leadership being hurled at the podium.
Yesterday’s meeting was markedly less feisty, but shareholders did question the risk involved with this transaction.
However, Bank of Ireland chief executive Richie Boucher noted that while it was not an operation without risk, it was for that very reason that the Bank was being paid such a high interest margin of 1.35%.
The bank’s chairman, Pat Molloy noted: “The transaction will benefit the State in its management of the overall state finances and is, therefore, anticipated to be of benefit to the overall Irish economy, which is also in the interests of the bank.
“The transaction is expected to contribute to an improved financial position for the State, including potentially allowing greater flexibility to the State’s access to the capital markets — which would be expected, in turn, to benefit the bank’s ability to access the capital markets in time.”
Mr Molloy also noted the deal should not have any adverse impact on Bank of Ireland’s capital ratios or liquidity ratios, given it can be funded under normal ECB market operations.