While Bank of Ireland (BKIR) has raised EUR 3.85 billion of the EUR 4.2 billion of additional capital needed by Dec. 31, the bank's plans to raise the additional EUR 350 million underscore the bleak outlook for BOI equity investors. Irish minister for finance Michael Noonan said last week that the bank may apply to write down the value of its subordinated liabilities by as much as 100%, which would generate the rest of the necessary capital. Similarly, much of the capital raised thus far has been through writedowns on junior debt. We caution equity investors that they are last in line as the company's value is divvied up--if bondholders are taking losses, that means it is unlikely there will be anything left for equity holders. We have no plans to resume rating the bank.
The above is an excerpt from the Morningstar Research Report on Bank of Ireland. Read the full report here. Morningstar Research is available to Premium subscribers.
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