Bank of Ireland gets court approval to set up new holding company

Bank of Ireland received High Court approval on Friday for a corporate reorganisation that will result in the creation of a new holding company.

This followed shareholder support for the move at an egm on April 28th and will involve Bank of Ireland Group plc becoming the holding company. The bank, which is 14 per cent State owned, has until July 14th to put the change into effect.

The corporate reorganisation was required by the European Union’s Single Resolution Board and the Bank of England to provide a framework for the bail-in of bondholders in the event of another financial crisis.

Deposits would continue to be held in the existing operating banks under the holding company, where they would enjoy greater protection.

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The new structure involves Bank of Ireland Group plc being introduced as the listed holding company that will own the ordinary shares of the company, and issue debt instruments.

Bank of Ireland said it expects dealing in BOIG plc shares will commence no later than July 17th.

In recommending the change in structure at its egm, Bank of Ireland chairman Archie Kane said a failure to implement it would have a “negative impact” on the group’s regulatory capital.

In parallel with this move, a stock consolidation will also take place, which will reduce the number of shares in issue.

Under a plan also approved at the egm, for every 30 shares that investors currently hold, they will receive one in the new listed holding company. Based on the closing price in Dublin on Friday, this would have the effect of multiplying its share price of 23 cent to €6.90, changing the bank’s current status as a so-called penny stock.