Bank of Ireland(Governor&Co) BOI Capital Developments (7017S)
December 23 2016 - 3:00AM
UK Regulatory
TIDMBKIR
RNS Number : 7017S
Bank of Ireland(Governor&Co)
23 December 2016
The Governor and Company of the Bank of Ireland (the
"Group")
Capital Developments
23 December 2016
The Group has executed a credit risk transfer transaction on a
portfolio of business banking and corporate loan assets effective
29 December 2016. Separately, the Group is revising its calculation
of capital requirements under the Internal Ratings Based ("IRB")
approach on its Republic of Ireland ("ROI") mortgage portfolio.
On a pro-forma basis, the Group expects the combined net impact
from these capital developments on the Group's transitional CET1
ratio to be a reduction of c.15bps (fully loaded CET1 ratio:
c.20bps).
Credit risk transfer transaction
The Group has executed a credit risk transfer transaction
effective 29 December 2016 on a reference portfolio of c.EUR3
billion of loan assets originated by the Group's Business Banking
and Corporate Banking divisions in the Republic of Ireland. On a
pro-forma basis, the transaction is expected to benefit the Group's
transitional CET1 ratio by c.50bps, the Group's fully loaded CET1
ratio by c.40bps and the Group's transitional Total Capital ratio
by c.65bps.
The transaction involves the execution of a credit default swap
backed by c.EUR185 million of credit linked notes issued by Grattan
Securities DAC to a small group of international investors. The
transaction reduces the Group's credit risk exposure, and
consequently the risk weighted assets on the reference portfolio of
loan assets, through a risk sharing structure whereby the buyers of
the notes assume the credit risk for c.EUR185 million of potential
credit losses on the reference portfolio of loan assets in return
for an initial annual coupon (interest expense) of c.EUR21
million.
No assets will be derecognised from the Group's balance sheet.
The reference portfolio of loan assets and related customer
relationships will continue to be maintained by the Group.
Revision of calculation of capital requirements on the Group's
ROI mortgage portfolio
The Group is revising its calculation of capital requirements
under the IRB approach on its ROI mortgage non-defaulted loan
portfolio. The revision is in advance of the ECB's targeted review
of internal models (TRIM) due to commence early next year and
increases the pro-forma average credit risk weighting on ROI
mortgages to 34%.
On a pro-forma basis, the revision is expected to reduce the
Group's transitional CET1 ratio by c.65bps, the Group's fully
loaded CET1 ratio by c.60bps and the Group's transitional Total
Capital ratio by c.85bps.
Ends
For further information please contact:
Bank of Ireland
Andrew Keating Group Chief Financial Officer +353 (0)766 23
5141
Alan Hartley Director of Group Investor Relations +353 (0)766 23
4850
Pat Farrell Head of Group Communications +353 (0)766 23 4770
Forward Looking Statement
This document contains certain forward-looking statements with
respect to certain of the Group's plans and its current goals and
expectations relating to its future financial condition and
performance, the markets in which it operates, and its future
capital requirements. These forward-looking statements often can be
identified by the fact that they do not relate only to historical
or current facts. Generally, but not always, words such as 'may,'
'could,' 'should,' 'will,' 'expect,' 'intend,' 'estimate,'
'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,' 'continue,'
'target,' 'goal', 'would,' or their negative variations or similar
expressions identify forward-looking statements, but their absence
does not mean that a statement is not forward looking. Examples of
forward-looking statements include among others, statements
regarding the Group's near term and longer term future capital
requirements and ratios, level of ownership by the Irish
Government, loan to deposit ratios, expected impairment charges,
the level of the Group's assets, the Group's financial position,
future income, business strategy, projected costs, margins, future
payment of dividends, the implementation of changes in respect of
certain of the Group's pension schemes, estimates of capital
expenditures, discussions with Irish, United Kingdom, European and
other regulators and plans and objectives for future
operations.
Nothing in this document should be considered to be a forecast
of future profitability or financial position and none of the
information in this document is or is intended to be a profit
forecast or profit estimate. Any forward-looking statement speaks
only as at the date it is made. The Group does not undertake to
release publicly any revision to these forward-looking statements
to reflect events, circumstances or unanticipated events occurring
after the date hereof.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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