Bank of Ireland
Bank of Ireland was ordered in March to raise an additional 4.2 billion euros in core Tier 1 capital to bullet-proof its balance sheet against future property-related losses following tough, fresh stress tests.
Before Friday, it had generated 3.85 billion euros towards that goal, most of it by imposing losses on junior bondholders and through a 1.1 billion euro investment by a group of North American investors, who now own 35 percent of the bank.
It completed the process by buying back 1.15 billion euros of outstanding residential mortgage backed securities (RMBS) issued by Kildare Securities Limited and Brunel Residential Mortgage Securitisation, an increase of 150 million on its original target.
Shares in the bank, which traded at almost 10 euros at the height of Ireland's Celtic Tiger economy four years ago, were 6.1 percent higher at 0805 GMT.
In a separate move to raise additional capital, Ireland's finance minister Michael Noonan said last week he was considering wiping out the value of some junior bonds in Bank of Ireland by applying to the courts to use emergency powers the state has deployed to impose losses on bondholders at other banks.
Analysts said now that Bank of Ireland has met the targets set under March's stress tests, a less coercive outcome may be possible for the over 400 million euros worth of subordinated debt that Noonan has in his sights.
The fact that the bank has satisfied its outstanding capital requirement under the stress tests suggests that any capital generated from the outstanding subordinated bondholders is bonus capital, Stephen Lyons, credit analyst at Davy Stockbrokers said.
It remains to be seen whether the minister will pursue a subordinated liabilities order and a less coercive outcome for bondholders may be possible through negotiation, as the Minister weighs up submissions received this week in this regard.
(Reporting by Padraic Halpin; Editing by Jon Loades-Carter)