€738m BoI boost will 'help speed up bad loan transfers'

Funding of $1bn (€738m) which the Bank of Ireland (BOI) raised yesterday is expected to lead to a speeding up of the transfer of under-performing property loans to the National Asset Management Agency (NAMA).

The Government will be anxious to see the money which the bank raised in dollars pumped into the economy as quickly as possible in order to make funds available to small businesses — the backbone of the economy — and to provide an increased level of mortgages, particularly for young people.

The sooner the ‘bad’ loans can be transferred, the quicker the bank can concentrate all its intentions on resuming normal lending practices.

The bank which will be transferring an estimated €2bn in bad loans to NAMA is anxious to do this as quickly as possible but the amount of paper work it has to complete in relation to the transfers has slowed the process down.

Now the Government, which provided the guarantee for yesterday’s loan and two previous ones earlier this year which raised $6bn dollars (€4.4bn), is to come under increased pressure to get all the bad loans transferred to NAMA as quickly as possible.

The plan is to transfer the loans of those with the ten biggest sums owed to them into NAMA as quickly as possible.

Anglo Irish Bank is believed to have under-performing loans amount to €10bn while nine construction firms account for €6bn between them.

Yesterday’s funds were raised from 50 investors from 18 countries.

39% of the money came from the USA, 35% from Europe and 26% from Asia/Middle East.

There was strong demand from long-term investors.

61% was issued to fund managers, 20% to Central Banks and Official Institutions and 19% to Banks.

The bond issue was over subscribed.