BANK of Ireland believes it can operate without a further Government guarantee and has refused to join growing calls for the support to be extended beyond the end of year.
Having revealed a near- doubling of half-year net losses to €1.2bn, chief executive Richie Boucher yesterday told analysts the bank was actively planning to "disengage from the guarantee in a prudent fashion".
Market sources are now expecting Bank of Ireland to carry out limited fundraisings outside the guarantee as early as the autumn, on foot of comments from Mr Boucher.
"With the recapitalisation we've done, the EU endorsement of our (restructuring) plan, us passing the stress tests leaves us with the capability to seek to get off the guarantee," Boucher said. "That's one of our very, very important strategic objectives," Mr Boucher added.
Mr Boucher's cautious optimism contrasted with fully nationalised Anglo Irish Bank, which last week said the Government guarantee should be extended into next year and which this week got EU approval for a fresh bailout of up to f10bn.
The Government's bank guarantee scheme was introduced at the beginning of the global financial crisis in September 2008 and the EU has approved an extension until the end of 2010 for debt of over three months' duration.
"Our goal is to get off the guarantee as quickly as we can and as prudently as we can," Mr Boucher said yesterday.
On the €1.8bn worth of preference shares held by the State, Mr Boucher said: "Our plan is that by 2013 these will be redeemed through profit accretion." These preference shares carry a coupon, or interest rate, of 10.25pc and the bank is due to make a cash payment to the exchequer next February.
Mr Boucher described the preference shares as "quite expensive" for the bank.
"We don't begrudge that but we note it," he added.
The State also holds a direct 36pc stake in Bank of Ireland, which is held through the National Pension Reserve Fund.
"They will have to decide what to do with that," Mr Boucher said. But, unlike his counterparts at Allied Irish Banks and Anglo Irish Bank, Mr Boucher stopped short of calling on the Government to extend the guarantee scheme, which is due to expire at the end of 2010.