LONDON (Alliance News) - Bank of Ireland PLC said Friday it intends to establish a new parent company of the group, as part of its contingency planning for a potential collapse.
Bank of Ireland said the move comes in response to a decision from the European Banking Union's Single Resolution Board and the Bank of England. The regulatory authorities have advised the Irish lender their preferred resolution strategy for a potential failure is a "single point of entry" bail-in.
Such a plan transfers subsidiary losses to a parent holding company, avoiding the complex break-up of a lender into healthy parts and 'bad banks'.
Therefore, Bank of Ireland expects to establish a new holding company, which will become its parent company. The lender noted this may in the short-term lower its total capital and Tier 1 capital ratios, due to the de-recognition of a proportion of existing subordinated debt.
However, Bank of Ireland said the impact on its capital ratios will be eliminated as the relevant debt is redeemed.
By Adam Clark; adamclark@alliancenews.com
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