Ireland bank to split more of financial regulation bill
Fresh hostilities over the costs of financial regulation are expected this week when the Central Bank of Ireland reveals plans to transfer more of the €185m annual bill to banks, insurance companies and other providers of financial services.
The Central Bank's annual report, to be published on Wednesday, will include a revised timeline for phasing in the gradual transfer of the full costs of regulation to the financial services industry.
Only the three bailed-out banks - AIB, Bank of Ireland and Permanent TSB - currently pay 100% of the cost of their regulation. Credit unions pay just 8%, with the rest of the cost covered by the Central Bank.
Bank of Ireland could raise as much as £350 million (€397 million), The Irish Times believes, through the sale of debt backed by some of its prime UK mortgages.
The State's largest domestic bank by assets is planning to refinance a basket of loans worth £2.27 billion, of which a benchmark will be sold to external investors. It is expected that that benchmark would translate into funds of £250 million-£350 million being raised. Bank of America Merrill Lynch and Lloyds Bank were the lead managers on the transaction, while Lloyds Bank Corporate Markets was the arranger.
More than 91 per cent of loans within the portfolio carry a triple A rating, while 8.63 per cent carry no rating.
The loans are, the bank said, high-quality UK residential mortgage loans, which are being bunched together for its external wholesale funding transaction being conducted through securitisation.
Securitisation involves bonds being issued to international investors, who would receive interest payments financed by income from the portfolio. "The transaction, which involves the issue of notes to third-party investors, will provide diversified, costefficient, long-term stable funding and demonstrates Bank of Ireland UK's continued progress towards transforming its business and delivering against its priority to improve returns," a spokesman said.