Brussels, 11/07/2011 (Agence Europe) - On Monday 11 July, the European Commission gave its temporary authorisation to the recapitalisation of the Bank of Ireland (BoI) by the Irish authorities, to the tune of €5.35 billion, in the form of a subscription by the Irish state of new securities to a maximum of €4.35 billion and a conditional injection of a further billion euros.
In order to give its definitive approval to these measures, the Commission is calling for a new restructuring plan to be presented before the end of the month of July, guaranteeing: a return to long-term viability for the bank, adequate participation of shareholders and holders of debt subordinated to the restructuring costs and the adoption of measures aiming to limit any competition distortions brought about by the public aid.
The Commission has agreed that the recapitalisation authorised on Monday is necessary to increase the solvency ratios of the bank and to maintain confidence on the Irish financial markets. The sum of €5.35 billion, divided up as stated above, corresponds to BoI's own fund requirements, defined further to the examination carried out by the Bank of Ireland in March of this year in compliance with the requirements of the EU/IMF rescue plan for Ireland, which was adopted in November 2010. Readers may recall that this plan provided for an examination of the prudential own funds of all banks concerned (Bank of Ireland, Allied Irish Bank, EBS and Irish Life and Permanent). The hypothetical objectives concerning the ratio of own funds used in this examination were, respectively, 10.5% own resources (basic scenario) and 6% (crisis scenario), in the hypothesis of a further reduction of the banks' ratio of indebtedness, allowing the banks to achieve a debt/deposit ratio of 122% by the end of 2013.
An initial restructuring plan for BoI was authorised on 15 July 2010 (see EUROPE 10182), after the bank had benefited from a public recapitalisation of €3.5 billion and other state aid. (F.G./transl.fl)