Bailed-out Bank of Ireland said yesterday that its net losses narrowed to €609 million in 2010 but warned of “challenging” times ahead as it seeks to raise fresh capital.
“For the 12 month period ended December 31 2010, the group made an after-tax loss of €609 million,” BoI said in its results statement. Net losses had stood at €1.76 billion in 2009.
Ireland’s government has been forced to bailout the eurozone country’s banking sector after years of reckless lending. In recent times it has been hammered by the international financial crisis and collapse of a domestic property bubble that has seen house prices plummet about 60 per cent since 2007.
BoI chief executive officer Richie Boucher yesterday said “trading conditions in the first months of 2011 remain challenging due to higher funding costs, in particular the cost of (falling) customer deposits, and the continuing difficult liquidity environment.”
In late 2010, debt-ravaged Ireland had to seek an €85 billion rescue package from the European Union and the International Monetary Fund. Last month meanwhile, Ireland’s central bank ordered a drastic overhaul of the nation’s stricken banking sector as the cost of bailing out its lenders was set to top €70 billion.
Under the shake-up the central bank has decided that BoI – about 36 per cent state owned – must raise equity capital of €4.2 billion.
“The group is working with its advisors on initiatives to seek to address the revised capital requirement in order to minimise the investment needed from the Irish taxpayers,” BoI said.
“The Minister for Finance has stated that the group will be provided with time in order to generate as much of the capital as possible from private sources.
“We expect to be in a position to make an announcement on our capital plans in the coming weeks,” BoI added.
Bank of Ireland is to form one of the two new “pillars” of a dramatically reduced Irish banking sector, the central bank announced last month.
Under the restructuring, BoI will stand alone while Allied Irish Banks (AIB), which announced losses of €10 billion on Tuesday, will merge with building society EBS.