DUBLIN: Bank of Ireland (Governor & Co) said on Friday that its plan to establish a new parent company will involve a proposed share consolidation, which will need approval from both shareholders and the High Court of Ireland. In early February, the bank said it intended to establish a new parent company of the group as part of its contingency planning for a potential collapse. The move is in response to a decision from the European Banking Union’s Single Resolution Board and the Bank of England.
The regulators advised the Irish lender their preferred resolution strategy for a potential failure is a “single point of entry” bail-in. Such a plan transfers subsidiary losses to a parent holding company, avoiding the complex break-up of a lender into healthy parts and ‘bad banks’. Bank of Ireland is therefore reorganising its corporate structure to make Bank of Ireland Group PLC the listed holding company of the group, facilitated through a scheme of arrangement that will require court approval.
In addition, the bank is proposing a share consolidation on the basis of one new Bank of Ireland Group shares for every existing 30 units held in the current London-listed entity. Ownership of the group will not change as a result. “Subject to High Court approval for this application, a High Court convened stockholder meeting and an extraordinary general court are expected to be convened and further information will be made available through the publication of a circular and a prospectus,” said Bank of Ireland. Shares were trading down 1.1% on Friday at EUR0.233.
