Finance Minister Michael Noonan said he was no longer considering using emergency powers to impose losses on junior bondholders in Bank of Ireland after the bank said today it had raised €350m in fresh capital.
Minister Noonan had warned last week that he was considering wiping out the value of some junior bonds to ensure Bank of Ireland generated the additional capital needed to meet its end-year recapitalisation target.
"As a result of the bank's announcement this morning, the minister is no longer considering the use of the powers available under CISA (Credit Institutions Stabilisation Act) for these purposes at this time," the Finance Department said in a statement.
Earlier, Bank of Ireland said it had met its end-year recapitalisation target today after it bought back outstanding securitised bonds consolidated on the group's balance sheet at a discount.
In a statement to the stock exchange, the bank said it paid between 33% and 92% of the notes' face value.
Bank of Ireland was ordered in March to raise another €4.2 billion in core Tier 1 capital to shore-up its balance sheet against future property-related losses after tough stress tests.
Before today, Bank of Ireland had generated €3.85 billion towards its recapitalisation goal, most of it by imposing losses on junior bondholders and through a €1.1 billion investment by a group of North American investors, who now own 35% of the bank.
It completed the process today by buying back €1.15 billion of outstanding residential mortgage backed securities (RMBS) issued by Kildare Securities Limited and Brunel Residential Mortgage Securitisation, an increase of €150m on its original target.
