BKIR.L Regulatory News (BKIR)

The Governor and Company of the Bank of Ireland ("Bank of Ireland" or the "Bank")

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY TO US PERSONS OR, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, NEW ZEALAND, SOUTH AFRICA, JAPAN, CANADA OR SWITZERLAND OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

On 18 June 2011, Bank of Ireland published a Prospectus which sets out how the Bank proposes to generate the €4.2bn Core Tier 1 Capital (after estimated expenses of €150m) and €1.0bn of contingent capital required to meet regulatory requirements by 31 July 2011.

The €4.35 billion (including estimated expenses) will be raised by a combination of:

• the Debt for Equity Offers (including a cash option) and compulsory acquisition of Eligible Debt Securities ("Liability Management Exercise" or "LME")

• the further burden sharing with remaining subordinated bondholders anticipated by the Minister for Finance as set out in his statement on 31 May 2011;

• potential State Placing (if it occurs); and

• a Rights Issue fully underwritten by the NPRFC.

Bank of Ireland today announced the early participation indicative results of the LME. To date, 72.4% of eligible holders have elected to accept the offer to exchange their bonds for cash or new ordinary stock. 95.4% of accepting bondholders elected to receive new ordinary stock and 4.6% of accepting bondholders elected to receive cash. As a consequence of this, the LME is expected to generate at least €1.98 billion of equity capital for Bank of Ireland. The final closing date for the LME (other than the Canadian Dollar 2015 Notes) is 7 July 2011.

Commenting on the results of the LME, Bank of Ireland stated:

"We are pleased with the successful outcome thus far of the LME and, in particular, the very high demand for equity in the Bank. This represents the first step in our capital raising proposals and significantly reduces the amount of capital we will be seeking to raise from the Rights Issue or other sources of capital".

Rights Issue Illustrative Scenarios

The table below sets out for illustrative purposes only a range of potential outcomes of ownership of the Bank, taking into account the early participation indicative results of the LME and based on certain illustrative assumptions including LME and Rights Issue take up, potential State Placing, foreign exchange assumptions together with assumptions concerning the application of the Minister for Finance's powers under the Stabilisation Act or otherwise:

1 Including approximately €0.11 billion (net of estimated tax) anticipated from the compulsory acquisition of Eligible Debt Securities

2 In the event that there are no further elections for cash or Allotment Instruments convertible into units of Ordinary Stock under the LME, the further burden sharing with bondholders anticipated by the Minister would result in the generation of Core Tier 1 Capital of approximately €0.51 billion, after taking account of the associated estimated tax costs to the Bank of approximately €0.06 billion

3 The size of the rights issue of €1.78 billion as set out above is based on the Minister's stated policy that there will be burden sharing with subordinated debt holders through the LME and, if necessary, action by the Minister under the Stabilisation Act or otherwise. If no further capital is generated through the LME or through the proposed amendments to the terms of subordinated bonds and the Core Tier 1 capital to be raised by further burden sharing cannot be taken into account for the purposes of calculating the final rights issue size, the maximum size of the rights issue would be €2.29 billion, resulting in a potential maximum State shareholding of 73.8% assuming 0% take up in the rights issue.

4 Based on the equity conversion price of €0.1156, being the Estimated Ex-Rights price, determined in accordance with the Offers

5 Based on 5.3 billion units of ordinary stock in issue as of 7 June 2011

6 The potential placing to the State of up to 794,912,043 units of new ordinary stock at €0.10 per unit of ordinary stock. Whether or not the State Placing proceeds is at the discretion of the State and there is no certainty that the State Placing will occur.

7 The impact of accrued interest is not reflected in the illustrative scenarios

8 The estimated rights issue size set out in the table above is based on the foreign exchange rates as at 10.00am on 23 June 2011 which were €1.00 = USD 1.4279, €1.00 = CAD 1.388 and €1.00 = GBP 0.89233. The actual size of the rights issue will be impacted to the extent the settlement foreign exchange rates for the LME are different to these rates.

Unless otherwise defined, capitalised terms used in this announcement have the same meaning as in the Prospectus dated 18 June 2011.

This announcement is not and should not be read as an offer to acquire or sell or exchange securities in connection with the LME, the rights issue or otherwise. It is not a prospectus or a prospectus "equivalent" document.  Any investment decision by a bondholder eligible to participate in the LME must only be made on the basis of information contained in or incorporated by reference in the Consent and Exchange Offer Memorandum. Any investment in respect of the rights issue by a qualifying shareholder should only be made on the basis of information contained in or incorporated by reference in the Prospectus. Qualifying stockholders should also read, in full, the risk factors set out in the Prospectus published by the Bank relating to the Proposals.

The securities that may be offered in the LME or the rights issue or the Placing have not been and will not be registered under the US Securities Act of 1933 and may not be offered or sold in the United States or to US Persons (as defined in Regulation S under the US Securities Act of 1933) absent registration or an applicable exemption from registration requirements.

This announcement is not for distribution, directly or indirectly, to US Persons or, in or into the United States, Australia, New Zealand, South Africa, Japan, Canada or Switzerland or any other state or jurisdiction in which it would be unlawful to do so.

Neither the content of Bank of Ireland's website nor any website accessible by hyperlinks on Bank of Ireland's website is incorporated in, or forms part of, this announcement.

The distribution of this announcement and/or any other documents related to any offering of securities or the transfer or offering of securities to US Persons or into jurisdictions other than Ireland and the United Kingdom may be restricted by law. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement contains or incorporates by reference certain "forward looking statements" regarding the belief or current expectations of the Group, the Directors and other members of its senior management about the Bank's financial condition, results of operations and business and the transactions described in the Prospectus. 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. Such forward looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Bank and are difficult to predict, that may cause the actual results, performance, achievements or developments of the Group or the industries in which it operates to differ materially from any future results, performance, achievements or developments expressed or implied from the forward looking statements. A number of material factors could cause actual results to differ materially from those contemplated by the forward looking statements.

None of the Minister for Finance, the Department of Finance, the Irish Government, the National Pensions Reserve Fund Commission, the National Treasury Management Agency , IBI Corporate Finance ("IBI"), Credit Suisse Securities (Europe) Limited ("Credit Suisse") or any person controlled by or controlling any such person, or any entity or agency of or related to the Irish State, or any director, officer, official, employee or adviser (including without limitation legal and financial advisors) of any such person (each such person, a "Relevant Person") accepts any responsibility for the contents of, or makes any representation or warranty as to the accuracy, completeness or fairness of any information in, this announcement or any document referred to in this announcement or any supplement or amendment thereto (each a "Transaction Document"). Each Relevant Person expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of any Transaction Document. No Relevant Person has authorised or will authorise the contents of any Transaction Document, or has recommended or endorsed the merits of the offering of securities or any other course of action contemplated by any Transaction Document.