TIDMBKIR
RNS Number : 1877B
Bank of Ireland(Governor&Co)
31 March 2017
This announcement and the information contained herein is
restricted and not for release, publication or distribution,
directly or indirectly, in whole or in part, into any jurisdiction
in which release, publication or distribution would be
unlawful.
This announcement is an advertisement and does not constitute a
prospectus or a prospectus equivalent document. Investors should
not acquire any securities referred to in this announcement except
on the basis of information contained in the prospectus expected to
be published following High Court approval of the convening of the
Stockholder meeting in connection with the proposed Scheme. Copies
of the prospectus will, following publication, be available from
the registered office of the Group, at 40 Mespil road, Dublin 4,
and on its website www.bankofireland.com/investor.
The Governor and Company of the Bank of Ireland
Update on the resolution strategy for the Group
31 March 2017
Further to the Group's announcement on 3 February 2017, the
Group has today filed an application with the High Court of Ireland
to commence the process for ordinary stockholder and High Court
approval regarding the establishment of a new Irish-incorporated
Group holding company.
The Group intends to implement a corporate reorganisation which
would result in Bank of Ireland Group plc ("BOIG plc"), being
introduced as the listed holding company of the Group. The
reorganisation will be implemented by a scheme of arrangement under
the Companies Act 2014 (the "Scheme"). The Scheme requires the
approval of ordinary stockholders and the High Court.
It is also proposed to implement a share consolidation as part
of the Scheme with ordinary stockholders receiving one BOIG plc
Share for every 30 units of ordinary stock in The Governor and
Company of the Bank of Ireland. Ordinary stockholders' ownership in
the Group will not change under the reorganisation.
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.
For further information please contact:
Bank of Ireland
Andrew Keating Group Chief Financial Officer +353 (0)766 23
5141
Alan Hartley Director of Group Investor Relations +353 (0)766 23
4850
Pat Farrell Head of Group Communications +353 (0)766 23 4770
Additional Information
1. Introduction
The Group intends to implement a corporate reorganisation which
would result in Bank of Ireland Group plc ("BOIG plc") being
introduced as the listed holding company of the Group. Under the
reorganisation, BOIG plc will become the 100% owner of the ordinary
stock in The Governor and Company of the Bank of Ireland (the
"Bank"), and ordinary stockholders in the Bank will receive new
ordinary shares in BOIG plc ("BOIG plc Shares") in proportion to
their current holding of ordinary stock in the Bank.
The reorganisation will be implemented by a scheme of
arrangement under the Companies Act 2014 (the "Scheme"), with
ordinary stockholders receiving one BOIG plc Share for every 30
units of ordinary stock. Ordinary stockholders' ownership in the
Group will not change under the reorganisation. The Scheme requires
the approval of ordinary stockholders and the High Court of
Ireland, and the Group has today filed an application with the High
Court to commence this process.
In addition, applications will be made by BOIG plc for admission
of the entire issued ordinary share capital of BOIG plc to the
primary listing segment of the Official List of the Irish Stock
Exchange and to the premium listing segment of the Official List of
the Financial Conduct Authority (the "FCA") and to trading on the
Irish Stock Exchange's Main Securities Market and the London Stock
Exchange's main market for listed securities.
2. Background
The Group announced on 3 February 2017 that it had been notified
by the Single Resolution Board ("SRB") (in the context of its
assessment of the resolvability of the Group) that the resolution
authorities (being the SRB and the Bank Of England ("BOE") working
together within the Resolution College) had reached a joint
decision on the group resolution plan for the Group and in that
context had settled on a single point of entry ("SPE") bail--in
strategy at a holding company level as the preferred resolution
strategy (the "Regulators' Preferred Resolution Strategy" or
"RPRS"). This form of SPE strategy means that a holding company,
which itself does not carry on any banking business would become
the listed parent company of the Group. The holding company would
be the primary issuer of the Group's capital instruments, including
shares, equity instruments and debt instruments. It would in turn
own subsidiaries (directly or indirectly) that would carry out the
banking business of the Group, including lending and taking
deposits. Under the SPE strategy, if the Group were to be
recapitalised as part of a resolution event, it is expected that
this would initially involve the restructuring of the capital at
the holding company level (including the bail--in of holders of
instruments issued by the holding company).
3. Reasons for the Scheme
The purpose of the Scheme is to implement the RPRS by
introducing a new Irish--incorporated company, BOIG plc, as the
listed holding company of the Group. In the event of a resolution
of the Group pursuant to an SPE bail-in strategy, BOIG plc would
become the entity at which any bail--in would primarily be carried
out, while the Bank, and its other subsidiaries, would, if the
resolution strategy is successful, retain their current role as
operational and retail deposit holding entities.
In making the decision to recommend that ordinary stockholders
approve the Scheme in 2017, the Court of Directors of the Group
("the Directors") have considered, among other things, the
following factors:
-- compliance with regulatory strategy: it is in the interests
of the Group that it is compliant with the RPRS, particularly
taking into account the powers of enforcement that the resolution
authorities have, including but not limited to, imposing their
preferred resolution strategy on the Group;
-- enhanced ability to meet minimum requirement for own funds
and eligible liabilities (MREL) targets: implementing the Scheme in
2017 gives BOIG plc a longer period in which to issue MREL eligible
debt to achieve MREL targets to be set by the SRB, thereby
maximising the opportunity for the Group to meet those targets as
efficiently and as soon as possible;
-- market clarity: the Scheme will give participants in the
capital markets clarity at an early stage as to the RPRS and how it
will be implemented by the Group;
-- improved resolvability: implementation of the Scheme is
intended to substantially improve the resolvability of the Group in
a manner compatible with the RPRS for the Group and in accordance
with the regulatory requirements of the jurisdictions in which the
Group operates; and
-- enhanced flexibility in debt issuances and "bail--in":
inserting the new holding company is expected to facilitate the
issue of debt by the holding company that can be "bailed--in" in a
resolution while limiting the consequences of the bail--in on the
operating entities of the Group and the creditors of those
entities.
In the course of their deliberations, the Directors also
considered the risks and consequences if the Scheme is not
implemented, the expected initial negative impact of the Scheme on
the Group's regulatory capital and the requirement to take further
steps to create distributable reserves in BOIG plc following the
implementation of the Scheme.
Taking these factors into account, the Directors believe that
timely establishment of a holding company is the most prudent
course of action for the Group and its stockholders.
4. Principal features of the Scheme
4a. Implementation of the Scheme
Subject to approval from the High Court, the reorganisation will
be implemented by way of a High Court--sanctioned scheme of
arrangement under Part 9 of the Companies Act 2014. Under the
Scheme, BOIG plc will become the holder of the entire issued and to
be issued ordinary stock of the Bank. This is to be achieved by the
cancellation or transfer of the ordinary stock in consideration for
which ordinary stockholders will receive BOIG plc Shares.
4b. Share Consolidation
It is proposed to implement a share consolidation as part of the
Scheme. The Directors believe that a consolidation of the issued
share capital of the Bank would position the share price in a range
that is more appropriate to the size of the Group and may assist in
reducing share price volatility. The Scheme has been structured to
include a round up mechanism such that fractional entitlements to
BOIG plc Shares which would otherwise arise as a result of the
consolidation will be rounded up and all ordinary stockholders
subject to the Scheme (i.e. holders of ordinary stock entered as
members on the register of members at the Scheme Record Time (6.00
p.m. (Irish time) on the date the Scheme becomes effective (the
"Effective Date"))) will have an entitlement to at least one BOIG
plc Share upon implementation of the Scheme. The expected exchange
ratio will entitle ordinary stockholders to receive one BOIG plc
Share for each individual holding of 30 units of ordinary stock
held by them at the Scheme Record Time.
4c. Expected Timeline
The Group is applying to the High Court, to request that the
High Court convene a Stockholder Meeting to consider the proposed
Group reorganisation. The Scheme will require approval by ordinary
stockholders at a High Court Convened Stockholder Meeting and the
ordinary stockholders at an Extraordinary General Court. The sole
purpose of the High Court Convened Stockholder Meeting is to seek
approval for the Scheme. A subsequent Extraordinary General Court,
which will be held immediately after the High Court Convened
Stockholder Meeting, will be called to enable ordinary stockholders
to approve elements of the Scheme and various matters in connection
with the Scheme, including the Scheme Resolutions. These meetings
will be convened by a circular to ordinary stockholders as soon as
High Court approval is received. It is also expected that on or
around the time of the circular to stockholders a prospectus
prepared in accordance with the Prospectus Directive (Directive
2003/71/EC) (as amended) will be published, subject to the approval
of the Central Bank of Ireland. A separate announcement will be
made upon the issue of the circular and the publication of the
prospectus.
If the Scheme is sanctioned by the High Court and the other
conditions to the Scheme are satisfied (or waived), the Scheme is
expected to become effective in July 2017 and dealings in BOIG plc
Shares to be issued pursuant to the Scheme are expected to commence
on or around the business day following the Effective Date.
5. Corporate Governance and Board of Directors
On the Effective Date, BOIG plc will have the same Board of
Directors, committee structures and management as the Bank. All
non--executive Directors of the Bank will be appointed to the Board
of BOIG plc on similar terms as those which are currently in place
with respect to their appointments to the Board of Directors of the
Bank. There will be no changes to the remuneration or benefits of
non--executive Directors appointed to the Board of BOIG plc.
Executive Directors will continue to have service contracts with
the Bank and their terms will be unchanged, other than to
acknowledge that, with effect from the Effective Date, their role
will include the same executive functions in respect of BOIG
plc.
6. Impact of the Scheme on Regulatory Capital
While it is not expected to impact on the Group's reported CET 1
ratios, a holding company structure may adversely impact the
consolidated Group's reported Total Tier 1, Total Capital and
leverage ratios. The impact will depend on the timing of the
holding company establishment, absolute capital levels and capital
structure at the time of establishment, and any mitigating actions
the Group may take. Had the scheme been implemented as of 1 January
2017, it is estimated that the Group's transitional Tier 1 Capital
ratio would reduce by approximately 0.7%, transitional Total
Capital ratio by approximately 1.8%, and transitional leverage
ratio by approximately 0.3%. These reductions arise as a
consequence of the regulatory application of Articles 85 and 87 of
the Capital Requirements Regulation. Whilst a certain amount of
these capital instruments will not count towards the calculation of
the Group's regulatory capital going forward, the instruments
remain available to absorb losses and are expected to count as
MREL.
7. Distributable reserves and dividend policy
The Group's aim is to have a sustainable dividend. The Group
expects dividend payments to recommence at a modest level,
prudently and progressively building over time, towards a payout
ratio of around 50% of sustainable earnings. The dividend level and
the rate of progression will reflect, amongst other things, the
strength of the Group's capital and capital generation, the Group's
assessment of the growth and investment opportunities available,
any capital the Group retains to cover uncertainties and any impact
from the evolving regulatory and accounting environments. As
additional clarity emerges on the impact of the UK's decision to
leave the European Union, and as the more recent improvement in the
IAS 19 accounting pension deficit is sustained, the Group expects
to recommence dividend payments in respect of financial year 2017,
with the initial payment being made in the first half of 2018.
Since BOIG plc would be a newly incorporated company, it will
not initially have distributable reserves. It is proposed that
following implementation of the Scheme, BOIG plc will create
distributable reserves by way of a High Court approved capital
reduction of BOIG plc.
In the event distributable reserves of BOIG plc are not created
pursuant to the capital reduction process, BOIG plc would have to
generate distributable reserves from realised profits earned after
the Scheme before making distributions by way of dividends, share
repurchases or otherwise. Although the Group is not aware of any
reason why the High Court would not approve the creation of the
distributable reserves, the issuance of the required order is
ultimately a matter for the discretion of the High Court.
Implementing the Scheme in 2017 should allow the Group to
maintain control over the timing of the implementation of the RPRS
so that there should, the Group believes, be sufficient time for
BOIG plc to apply to the High Court for approval of a capital
reduction to create distributable reserves which would be available
for 2018.
8. Risks and consequences if the Scheme is not implemented
If the Group does not comply with the RPRS in a timely manner
and fails to implement a holding company structure (whether through
failure to obtain the required level of stockholder approval for
the Scheme Resolutions or High Court approval of the Scheme), the
Group could ultimately face a number of adverse consequences,
including the following:
-- the Group may not have in place a structure to enable orderly
resolution in a distressed scenario;
-- the regulatory authorities relevant to the Group, including
the European Central Bank and the BOE (the "Regulatory
Authorities") could impose obligations on the Group, including but
not limited to, imposing the RPRS in a manner that is not optimal
for the Group's interests, either in terms of structure or timing,
or which could otherwise have uncertain outcomes for the Group;
-- the Group may have difficulty in meeting MREL requirements in a timely manner;
-- in the absence of an implemented SPE strategy, the Regulatory
Authorities could exercise other regulatory powers in relation to
the Group, including imposing increased capital requirements;
and
-- enforcement action could be taken against the Group by the
Regulatory Authorities (including ultimately the risk of sanctions,
fines or penalties) and/or, ultimately, it may result in a
withdrawal of the Group's relevant banking licences in Ireland
and/or the UK which it requires to continue in business.
Such consequences could adversely affect the reputation,
business and financial condition of the Group and/or the value of
the ordinary stock and, ultimately, threaten the ability of the
Group to continue its operations.
Ends.
Forward Looking Statement
This document contains certain forward-looking statements with
respect to certain of the Group's plans and its current goals and
expectations relating to its future financial condition and
performance, the markets in which it operates, and its future
capital requirements. These forward-looking statements often can be
identified by the fact that they do not relate only to historical
or current facts. Generally, but not always, words such as 'may,'
'could,' 'should,' 'will,' 'expect,' 'intend,' 'estimate,'
'anticipate,' 'assume,' 'believe,' 'plan,' 'seek,' 'continue,'
'target,' 'goal', 'would,' or their negative variations or similar
expressions identify forward-looking statements, but their absence
does not mean that a statement is not forward looking. Examples of
forward-looking statements include among others, statements
regarding the Group's near term and longer term future capital
requirements and ratios, level of ownership by the Irish
Government, loan to deposit ratios, expected impairment charges,
the level of the Group's assets, the Group's financial position,
future income, business strategy, projected costs, margins, future
payment of dividends, the implementation of changes in respect of
certain of the Group's pension schemes, estimates of capital
expenditures, discussions with Irish, United Kingdom, European and
other regulators and plans and objectives for future
operations.
Nothing in this document should be considered to be a forecast
of future profitability or financial position and none of the
information in this document is or is intended to be a profit
forecast or profit estimate. Any forward-looking statement speaks
only as at the date it is made. The Group does not undertake to
release publicly any revision to these forward-looking statements
to reflect events, circumstances or unanticipated events occurring
after the date hereof.
IMPORTANT NOTICE
The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this announcement or its accuracy, fairness or completeness.
The contents of this announcement are not to be construed as
legal, financial or tax advice. Each prospective investor should
consult his own legal adviser, financial adviser or tax adviser for
legal, financial or tax advice, respectively.
NOTICE TO OVERSEAS INVESTORS
The distribution of this document and issue of BOIG plc Shares
in certain jurisdictions other than Ireland and the United Kingdom
may be restricted by law. No action has been taken by the Bank or
Davy and UBS Limited (together the "Sponsors") to permit a public
offering of BOIG plc Shares or possession or distribution of this
document (or any other offering or publicity materials relating to
BOIG plc Shares) in any other jurisdiction where action for that
purpose may be required or doing so is restricted by law.
Accordingly, neither this document nor any advertisement may be
distributed or published in any other jurisdiction except under
circumstances that will result in compliance with any applicable
laws and regulations. Persons into whose possession this document
comes are required by BOIG plc and the Sponsors to inform
themselves about and observe any such restrictions. Any failure to
comply with these restrictions may constitute a violation of the
securities laws of any such jurisdiction.
This document does not constitute or form part of an offer to
sell or the solicitation of an offer to buy or subscribe for, BOIG
plc Shares to any person in any jurisdiction to whom or in which
such offer or solicitation is unlawful. Further information on the
restrictions to which the distribution of this document is subject
is set out in Section 8 of Part V of the Prospectus.
The BOIG plc Shares have not been and will not be registered
under the applicable securities laws of Japan, Switzerland, the
Republic of South Africa, or the United Arab Emirates. Accordingly,
subject to certain exceptions, the BOIG plc Shares may not be
offered or sold in Japan, Switzerland, the Republic of South Africa
or the United Arab Emirates or to, or for the account or benefit
of, any resident of Japan, Switzerland, the Republic of South
Africa or the United Arab Emirates.
NOTICE TO INVESTORS IN THE UNITED STATES
The BOIG plc Shares have not been, and will not be, registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act") or under the securities laws of any state, district or other
jurisdiction of the United States, and may not be offered, sold,
delivered or transferred except pursuant to an available exemption
from or in a transaction not subject to the registration
requirements of the Securities Act and applicable US state
securities laws. It is expected that the BOIG plc Shares will be
issued in reliance on the exemption from the registration
requirements of the Securities Act provided by Section 3(a)(10) of
the Securities Act.
EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT
For the purposes of qualifying for the exemption from the
registration requirements of the Securities Act provided by section
3(a)(10) thereof with respect to the BOIG plc Shares to be issued
pursuant to the Scheme, the Bank will apprise the High Court that,
if sanctioned, its sanctioning of the Scheme will be relied upon by
the Bank and BOIG plc as an approval of the Scheme following a High
Court Hearing on its fairness to the Ordinary Stockholders at which
High Court Hearing all Ordinary Stockholders will be entitled to
attend in person or through counsel to support or oppose the
sanctioning of the Scheme and with respect to which notification
has been given to all Ordinary Stockholders. Ordinary Stockholders
(whether or not US persons (as defined in the Securities Act)) who
are affiliates of the Bank or will be affiliates of BOIG plc at the
Effective Date will be subject to certain US resale restrictions
relating to the BOIG plc Shares received pursuant to the
Scheme.
None of the US Securities and Exchange Commission, any other US
federal or US State securities commission or any US regulatory
authority has approved or disapproved of the BOIG plc Shares
offered by the Prospectus nor have such authorities reviewed or
passed upon the accuracy or adequacy of the Prospectus or any
accompanying documents. Any representation to the contrary is a
criminal offence in the United States.
NOTICE TO INVESTORS IN CANADA
This document is not, and under no circumstances is to be
construed as, a prospectus under Canadian securities laws, an
advertisement or a public offering of the securities described
herein in Canada. No securities commission or similar regulatory
authority in Canada has in any way passed upon the merits of the
BOIG plc Shares nor has it reviewed or passed upon the accuracy or
adequacy of this document or any accompanying documents. Any
representation to the contrary is an offence in Canada.
NOTICE TO AUSTRALIAN INVESTORS
This document is made available to persons in Australia without
a disclosure document pursuant to an exemption and declaration made
by the Australian Securities and Investments Commission that BOIG
plc does not have to comply with Part 6D.1 or 6D.3 of the
Australian Corporations Act 2001 (Cth) (the "Corporations Act") for
an offer of BOIG plc Shares to Ordinary Stockholders in the
Bank.
This document is not a prospectus, product disclosure statement
or any other form of "disclosure document" for the purposes of the
Corporations Act and is not required to, and does not contain all
the information which would be required in a disclosure document
under the Corporations Act.
This document has not been lodged with or been the subject of
notification to the Australian Securities and Investments
Commission or ASX or any other regulatory body or agency in
Australia. Accordingly, the BOIG plc Shares may not be offered,
issued, sold or distributed in Australia by any person other than
by way of or pursuant to an offer or invitation made by BOIG plc of
BOIG plc Shares to Ordinary Stockholders in the Bank. If you are in
Australia, this document is made available to you provided you are
an Ordinary Stockholder in the Bank.
The persons referred to in this document may not hold Australian
financial services licences and may not be licensed to provide
financial product advice in relation to the BOIG plc Shares. No
"cooling-off" regime will apply to an acquisition of BOIG plc
Shares.
This document does not take into account the investment
objectives, financial situation or needs of any particular person.
Accordingly, before making any investment decision in relation to
this document, you should assess whether the acquisition of BOIG
plc Shares is appropriate in light of your own financial
circumstances or seek professional advice.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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