EU allows Bank of Ireland to keep New Ireland unit but extends dividend ban
Bank of Ireland won EU approval to keep its insurance arm, but will have to sell other businesses and will also be banned from paying dividends beyond 2015 in line with a restructuring related to its bailout four years ago.
Irish authorities pumped €3.5bn into the bank in 2009 in a rescue after the financial crisis. The bank subsequently had to sell assets and to stop paying dividends in return for securing the European Commission's clearance for the aid.
BOI had promised to sell its insurance business in 2011 under a second restructuring plan approved by the European Commission.
"In the light of various changes in the market circumstances since the 2011 decision, BOI is in particular no longer required to divest New Ireland Assurance Company (NIAC)," the EU state aid regulator said in a statement.
"Such a divestment would negatively affect BOI's capital and capacity to return to profitability and would slow down progress towards long term viability," it said.
But the bank will have to exit from business banking and corporate banking in Britain and also from the intermediary mortgage market in Ireland by selling parts of its ICS Building Society.
"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 said.