Bloomberg News

Bank of Ireland’s Exposure to Nation’s Debt Rises EU1.4 Billion

December 09, 2011

Dec. 9 (Bloomberg) -- Bank of Ireland Plc, the nation’s largest bank, increased its exposure to the government’s sovereign debt by 1.44 billion euros ($1.93 billion) in the first nine months of the year, Irish central bank figures show.

The Dublin-based bank’s net Irish sovereign holdings on its available-for-sale book rose to 4.57 billion euros during the period, according to figures prepared as part of European Banking Authority stress tests, published late yesterday.

“The increases are consistent with the widely-reported reinvestment of some of the capital the government injected into the banks this year,” via contingent capital bonds, said Stephen Lyons, a fixed-income analyst at Dublin-based securities firm Davy, in an e-mail response to questions.

The banks issued so-called co-co bonds to the state in return for cash injected as part of the recapitalization of the financial system. Lenders offset the 10 percent coupon on those securities by buying the country’s sovereign bonds, the Sunday Business Post reported Oct. 9, without citing anyone.

The yield on the Irish 5 percent security due October 2020 rose 5 basis points to 8.82 percent as of 13:20 p.m. in London, That’s fallen from 15.5 percent in July.

Allied Irish Banks Plc’s net Irish sovereign debt position rose 9 percent to 5.49 billion euros. Irish Life & Permanent Plc’s exposure rose 30 percent to 2.39 billion euros, though it declined 6.4 percent on an assets available-for-sale basis to 1.73 billion euros.

Officials at Allied Irish and Irish Life weren’t immediately able to comment. A Bank of Ireland spokeswoman declined to comment.

--Editors: Dara Doyle, Keith Campbell

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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