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Dublin: 13°C Tuesday 28 June 2022

Bank of Ireland shareholders approve complex promissory note - bond deal

Shareholders at the bank voted overwhelmingly in favour of the deal that was first announced by the Finance Minister in March.

File photo
File photo
Image: Peter Morrison/AP/Press Association Images

BANK OF IRELAND shareholders have overwhelmingly approved a motion backing a transaction which allows the government to pay the controversial Anglo Irish Bank promissory note through a bond instead of using cash.

At an extraordinary general meeting in Dublin today, 99.98 per cent of the bank’s shareholders approved a deal whereby a bond that the government is giving to the defunct bank – now known as Irish Bank Resolution Corporation – will be refinanced with BoI.

The issuing of the bond allowed for the deferring of a €3.06 billion promissory note – issued to Anglo in the aftermath of the bank guarantee – that was due to be paid in full at the end of March.

A few days prior to that payment Finance Minister Michael Noonan announced that a deal had been reached whereby the payment would be made using an Irish government bond.

This meant that there would be a significant cash flow benefit to the Exchequer in 2012, Noonan claimed.

The Finance Minister directed the National Asset Management Agency (NAMA) to temporarily finance the bond before entering into a longer term refinancing arrangement with BoI which could only be done with shareholder approval.

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The loan facility between NAMA and IBRC expired at the end of May leading to fears that the deal could come a cropper but the facility was extended until 20 June and with shareholder approval secured today the deal can now proceed.

The bank will make just over €36 million from its facilitating of the deal.

Bank of Ireland’s chief executive, Richie Boucher, admitted to shareholders in Dublin today that the transaction was not without risk if there was a ‘catastrophic overnight default’ by the government on the payment, RTÉ reports.

ECB president: ‘Utmost importance’ that Ireland continues promissory note repayments

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Hugh O'Connell

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