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Dublin: 10 °C Friday 28 November, 2014

In last bondholder payment of 2012, BoI pays out nearly €40 million

The only one of Ireland’s main banks not under State control makes the final payment to bondholders today bringing to over €20 billion the amount paid out by it and other banks this year.

Bank of Ireland in Dublin (File photo)
Bank of Ireland in Dublin (File photo)
Image: James Horan/Photocall Ireland

IN THE LAST of over €20 billion in bonds paid out this year by Irish banks, Bank of Ireland has paid out €37.3 million to senior unsecured bondholders today.

The bank, which managed to avoid State control during the financial crisis, issued the bond in 2005 and it matures today with a payout of €37.3 million marking the last such payment of this year.

Bank of Ireland is the only one of the six institutions covered by the State’s bank guarantee, initially introduced in 2008, not to come under the majority control of the State though the government is a minority shareholder.

The independent TD Stephen Donnelly, who has consistently criticised bondholders repayments this year, told TheJournal.ie today: “At this stage I guess it’s up to Bank of Ireland as to whether or not they honour their bondholders. We’re only a minority shareholder now.

It’s a funny old world where €36 million becomes a trivial amount of money.
If you think about the respite care grant, the total amount of the cut is €26m but when you factor in the government’s multiplier it’s €18 million, so the payment today is twice the government’s respite care grant cut.

In total over €20 billion has been paid out to bondholders by Irish banks this year.

Among these was a January repayment of a €1.25 billion bond to senior, unsecured bondholders in the now defunct Anglo Irish Bank despite protests.

In March of this year the government announced a deal to defer the payment of a controversial €3.1 billion promissory note due to bondholders in Anglo – now Irish Bank Resolution Corporation.

The promissory note was swapped for a long-term government bond that was funded initially by the National Asset Management Agency before it was refinanced over a longer period with Bank of Ireland.

In facilitating the deal for the government Bank of Ireland will make itself just over €36 million, just short of the amount it is paying to senior, unsecured bondholders today.

The bondholder repayments this year also included a €1 billion payment by Allied Irish Banks (AIB), 99 per cent owned by the State, in unsecured debt to senior bondholders in October.

Next year Irish banks are due to pay out €17.4 billion to bondholders, followed by €5.9 billion in 2014 and €11.6 billion in 2015 according to a website which tracks the repayments, Bondwatch.

Donnelly said today that €6.9 billion of the money due next year is unguaranteed – meaning it is not tied to any specific assets like a mortgage debt which is tied to a property.

“So that is twice the entire Budget correction this year. It defies belief that we’re still doing this, that these guys are getting paid,” he said, adding: “It’s not only unsustainable, it’s wrong, it’s just flat out wrong.”

Ireland has committed a total of €64.1 billion to its banking sector since the original guarantee was introduced in 2008 during the global financial crisis.

Read: EU approves six-month extension of Ireland’s bank guarantee

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