BoI gets approval to cut share capital by €3.92bn

A Bank of Ireland petition to reduce its share capital by €3.92bn to €1.97bn has been approved by the Commercial Court.

The proposed reduction in the bank’s share premium account was approved by shareholders last June and by the minister for finance, but also required court approval.

Yesterday Ms Justice Mary Finlay Geoghegan told Paul Sreenan, counsel for the bank, that having read the petition and accompanying documents, she was satisfied to grant the application.

The court had heard the share capital reduction does not affect the regulatory capital of the bank.

In an affidavit, the bank’s chief executive Richie Boucher said the reserve created from the reduction is to be treated as profits available for distribution and is intended to ensure the bank has sufficient distributable reserves, after accounting for potential losses, to enable it make distributions and declare dividends to stockholders.

The directors had resolved to seek the full amount of €3.92bn authorised under a resolution approved by shareholders, rather than any lesser amount, to ensure the bank had a sufficient buffer of distributable reserves available to absorb potential future losses and protect it from the effects of volatility in the financial markets, he said.

The bank had total assets of about €155bn at end of Dec 2011, Mr Boucher added.