Subordinated debt holders to face squeeze

ALLIED Irish Banks and Bank of Ireland are expected to put the squeeze on the holders of €9 billion of subordinated debt to help part-fund an extra €7.5bn in capital the Central Bank wants the country’s two biggest banks to put in place.

AIB needs to raise an additional €5.3bn to ensure it has sufficient capital to meet potential losses. It has €4.8bn in subordinated debt, which is trading at 35 cents. BoI needs to raise about €2.2bn and has about €4bn in subordinated debt trading at close to 50 cents in the euro.

Any cash raised will be on top of the €8bn to be pumped into Irish banks under the €85bn emergency loan package agreed with the IMF and the EU.