BANK of Ireland shareholders on Monday approved its role in a complex refinancing operation the government is using to delay a 3.1pc cash repayment to the failed Anglo Irish Bank.
The government in March announced it would issue a 13-year bond to avoid using cash for the payment that was due at the end of March.
The bond will be financed for one year on commercial terms with Bank of Ireland, which in turn plans to refinance the bond with the European Central Bank.
The bank says the transaction will have no impact on its capital ratios due to the collateralised and guaranteed nature of the deal.
Bank of Ireland, in which the government holds a 15pc stake, expects to make a profit of €38.7m on the transaction, based on an interest margin of 1.35pc.
The €3.1bn is part of €30bn of high-interest IOUs given mainly to former Anglo Irish Bank, which is being wound down by the Irish Bank Resolution Corporation.
Dublin is using the refinancing scheme to give it time to negotiate with the ECB for a wider deal it hopes could replace the IOUs with another instrument that would lengthen their maturity and cut their interest rate.
Shareholders voted on Monday at an extraordinary general meeting held in Dublin and backed the resolution by 99.9pc.