Bank of Ireland - Disposal of Contingent Capital Notes by the Minister for Finance
The Minister for Finance, Michael Noonan T.D., today welcomed the successful conclusion of negotiations which will see the Government dispose of a minimum of €500 million of its €1 billion holding of Contingent Capital Notes (CCN’s) in Bank of Ireland. The exact quantum and price at which this disposal will be conducted will depend on the outcome of a public investor book build exercise to be conducted by a consortium of banks.
The Minister stated:
“I am delighted to announce this latest transaction which represents another vote of confidence by international investors in Ireland’s recovery and the government’s banking policies in particular. Since making this €1 billion investment in Bank of Ireland in July 2011 the Irish taxpayer has received a generous return of 10% per annum on its money.”
This transaction follows an initial approach by investment banks to the Department late last year which indicated that there was sizeable investor interest in the State’s CCN or “Coco” instruments and particularly the holding in Bank of Ireland.
These Contingent Capital instruments are debt securities which convert into equity in the bank on the occurrence of certain stress events or if the bank’s capital falls below a set ratio. The State’s investment in these instruments dates back to the 2011 PCAR exercise, and the successful exit from a large portion of this position represents another step along the road to normalising the State’s relationship with the banking sector and reflects positively on the progress being made in returning our banks to a position of strength.