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Bank of Ireland raises €500million in loan sale

It’s hoped the move will avoid the need for further taxpayer support of the bank.

Image: Sasko Lazarov/Photocall Ireland

BANK OF IRELAND has raised €500million with the sale of a package of loans to a Japanese bank.

The sale is part of an effort by the bank to deleverage its assets and raise capital. The loans were sold to the Sumitomo Mitsui Banking Corporation at a discount of around 16 per cent from the total amount lent by the bank, which is roughly €560million.

It’s hoped the move will reduce the taxpayer bill for funding the troubled bank. However, it will have no impact on the lender’s Core Tier 1 capital ratio.

In a statement, the bank said it had now deleveraged by selling off lending commitments to the value of €1.55billion, with an average discount of around 10 per cent.

Under the conditions of stress tests mounted earlier this year, Bank of Ireland is committed to raising €4.2billion in extra capital before December 31. As of last week it had raised €3.85billion of this amount.

Read more: Noonan mulls burning Bank of Ireland’s junior bondholders>

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Michael Freeman

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