The Bank of Ireland laid bare the depth of its crisis today as it reported a fall of nearly €3 billion (£2.6 billion) into the red in the first nine months of its financial year, had written down the value of loans to customers by more than €4 billion and said it would need to raise €2.7 billion to shore up its balance sheet.
While the level of writedowns in its business is thought to have peaked, Richie Boucher, its chief executive, admitted there is no let up from the ongoing crisis in the Irish economy.
The state of the Bank of Ireland’s finances is revealed amid the latest bailout of the Irish banking sector with the Government committing to stand behind up to €20 billion of new funding needed across the industry to keep it afloat. That comes on top of the creation of the National Asset Management Agency, a so-called “bad bank” in which struggling finance houses can dump €16 billion of their most toxic lending.
In a bid to keep Bank of Ireland in business, Mr Boucher said he believes a fundraiser of €2.7 billion “will be sufficient to meet its capital requirements.”
Bank of Ireland’s interests in the UK include running the banking products and credit card services of the Post Office.
For the nine months to the end of December, the Bank of Ireland reported an underlying operating profit of €1.05 billion. That however was wiped out by €4.05 billion of impairment charges on loan assets, €2.23 billion of which is destined for the NAMA bad bank. The underlying pre-tax loss for the period came in at €2.97 billion.
In a statement Mr Boucher said: “There was a further contraction in the level of economic activity across our core markets in Ireland and the UK and difficult economic conditions globally.
“With highsight it is clear that the Bank’s growth ambitions in previous years had been framed against an overly optimistic view of the outlook for the Irish economy and it was too exposed to the property sector and too reliant on wholesale funding.”