Wednesday 13 December 2017

Taxpayer to make €1bn-plus profit on BoI bailout

Nick Webb

Nick Webb

The taxpayer will make a €1bn-plus profit on the €4.8bn in rescue money used to bail out Bank of Ireland.

Last week, Bank of Ireland told investors that it had paid the State €3.8bn in assorted fees, coupon payments and buy-backs.

The State still holds €1.8bn worth of preference shares in the bank. Next March, the cost to buy back those shares from the State will rise to €2.25bn under a "step-up agreement".

Investors believe that Bank of Ireland will launch a €1.8bn rights issue or investor cash call to fund the buy-back of those shares.

So far, Bank of Ireland has paid the State €1.4bn in fees associated with the bank guarantee. It has also forked out €800m in the repurchase of warrants and recapitalisation fees.

Another €600m has been paid into State coffers in coupon payments from the preference shares, with another €1bn paid to the State from the "CoCo" transaction earlier this year.

"Bank of Ireland has received support and investment from the Irish taxpayers, and we have always acknowledged our gratitude for this. The State's gross cash investment in the Bank peaked at €4.8bn," Bank of Ireland group chief executive Richie Boucher told the Sunday Independent.

"It is a strategic objective of Bank of Ireland to reduce the risk to the taxpayer and to repay the investment. The recent removal of the Government Guarantee (ELG) greatly reduces the risk and we are glad to be making progress on repaying the investment," said Mr Boucher

The State also holds a 15 per cent stake in Bank of Ireland, worth around €680m. Shares in the bank have risen close to 50 per cent since the start of the year.

Last week, Bank of Ireland reported a €2.1bn loss for 2012 but it indicated that the "economic environment had improved somewhat in recent months".

Irish Independent

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