Bank of Ireland is reported to have raised €350 million through a buy-back of residential mortgage backed securities. It is understood that the purchase comprised €1.1 billion of notes issued by Kildare Securities Limited and Brunel Residential Mortgage Securitisation No 1 at between 33% and 92% of face value.
The Minister for Finance, Mr Michael Noonan, had proposed seeking a subordinated liabilities order from the Irish High Court in the event that the bank failed to raise the capital required to meet the €4.2 billion target set by the Central Bank. Such an order would have allowed the Minister to impose losses of up to 100% on subordinated bondholders.
The Minister’s proposals resulted in threats of legal action from a group of five hedge funds holding approximately €300 million of subordinated debt, and also from a group of UK pensioners holding approximately €54 million of subordinated debt. The Minister ultimately abandoned these plans after the bank raised the capital required.