Brussels, 10/07/2013 (Agence Europe) - The Bank of Ireland (BOI) will no longer be obliged to sell its insurance company New Ireland Assurance Company (NIAC), as laid down in its second restructuring plan approved in December 2011 (see EUROPE 10520), but may replace this move with equivalent commitments, the European Commission decided on Tuesday 9 July, taking the view that this amendment is compatible with EU rules on state aid.
The 2011 decision definitively authorised various state aid to allow BOI to carry out a root-and-branch restructuring in order to return to viability by re-centring its activities and reducing its dependence on market financing. In exchange, the bank undertook, amongst other things, to sell off NIAC, its life assurance arm. In the meantime, the recent sale of Ireland's largest life assurance company has had an impact on the number of potential acquirers of NIAC, bringing about the risk that it will be sold at a loss, which would jeopardise the likelihood of BOI being able to build its capital back up and re-establish its long-term viability. The bank therefore asked not to have to sell the company and offered commitments designed to compensate for the competition disturbances which could result from this changed to the restructuring plan. These commitments are: - its exit from the Great Britain business banking and Great Britain corporate banking businesses; - abandoning its intermediary mortgage market activities in Ireland, by selling all or part of its ICS Building Society distribution platform along with mortgage assets and deposits up to €1 billion; - extending a series of market opening measures up to December 2016. Additionally, the Irish authorities committed to ensure that BOI will extend limitations on the distribution of dividends beyond December 2015 or until it has reimbursed the Irish state for the preference shares. The Commission accepted these commitments. (FG/transl.fl)