Bank of Ireland has reduced its outstanding stock of so-called 'own use' bonds by €1.5bn.
The unusual bonds have been a feature of the financial crisis and are used by banks to create collateral that is used to borrow from the European Central Bank (ECB). It means that, unlike traditional bonds, the debt the bonds represent is never held by outside investors.
Banks were able to use the 'own use' bonds as collateral at the ECB, as long as the debt was backed by a government guarantee.
Irish banks have been issuing such so-called own-use, or self-held, bonds since 2011. At the time all of the main banks were locked out of the bond markets and struggling to raise private sector debt.
The €1.5bn of bonds that Bank of Ireland has now repurchased were part of €5bn issue of the bonds done in the last week of March this year, just before the ending of the bank guarantee.
However, the €5bn of bonds has now been reduced to €2bn, including an earlier redemption.
Permanent TSB issued €3bn of self-held bonds in the week before the bank guarantee was scrapped. At one stage there was a total of €18bn such debt outstanding across all the banks, a sign of their dependence on emergency support.