Bank of Ireland pays off €1.3bn debt
Bank of Ireland has cleared the last hurdle in the way of making dividend payments to shareholders, after paying off a costly €1.3bn debt racked up during its financial rescue.
The bank said last night that it had redeemed €1.3bn of so-called preference shares, a form of debt, on January 4 in line with its previously announced plans.
The debt was originally loaned to the bank by the State in 2009 and carried an interest rate of 10.25pc, or around €300,000 a day.
The preference shares were sold to a group of private investors in December 2013 in a deal that allowed taxpayers to partially recoup bank bailout costs even before the lender was in a position to redeem the debt itself.
That investor group was understood to include some of the bank's then key shareholders such as US billionaire Wilbur Ross and his Canada based peer Prem Watsa.
Under the terms of the 2013 deal Bank of Ireland committed not to repay the debt before January 2016, and it has now been redeemed at the earliest possible date.
Without the €113m cost of servicing the debt drag Bank of Ireland will be able to begin setting aside profits to fund dividend pay-outs to shareholders for the first time since 2008.