Huge loss of 1bn fuels bailout fears at Bank of Ireland
BANK of Ireland reported pre-tax losses of almost €1bn (£895m) yesterday and warned it may need another state bailout.
The bank, which has 44 branches in Northern Ireland and runs a financial services joint venture with the UK Post Office, said the past six months had been difficult as it gave a cautious appraisal of future economic prospects.
Shares in Ireland’s biggest bank have slid on fears that delays in the launch of the National Asset Management Agency (NAMA) would hinder attempts to raise capital privately.
“While the group’s strong preference would be to raise capital from private sources… ultimately it may be required to seek capital from the Irish government,” Bank of Ireland said in a statement.
The bank’s UK division posted a operating profit of £163m but that became a £203m loss when impaired loan charges were taken into account.
Bank of Ireland, which has received €3.5bn of capital from the state in return for a 25 per cent indirect stake, said the “bad bank” scheme was still not clear enough.
It added significant uncertainties exist surrounding the specific amount of loans being transferred, when they will be transferred and the price that will be paid for those loans.
Ireland’s banking sector has been badly hit by the global financial crisis and the collapse of the domestic property market.