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Bank of Ireland can keep New Ireland Assurance unit, but dividends ban extended

Bank of Ireland has today secured EU regulatory approval to hold on to its assurance unit, New Ireland Assurance Company.

But under a new restructuring plan agreed with the European Commission, the bank will still have to sell other units.

Bank of Ireland was currently restricted on paying dividends until December 2015.
Under the new plan, the payment of dividends will also be restricted from January 2016 depending on the amount of preference shares the bank has paid back to the State.
“In the light of various changes in the market circumstances since the 2011 decision, Bank of Ireland is in particular no longer required to divest New Ireland Assurance Company,” the European Commission said.

“Such a divestment would negatively affect Bank of Ireland’s capital and capacity to return to profitability and would slow down progress towards long term viability,” an EU statement added.
Two years ago, the European Union’s executive had ordered Bank of Ireland to sell the assurance unit in return for approving state aid granted to the bank.

The new restructuring plan will also see Bank of Ireland no longer offer new mortgages through its intermediary channel. This channel accounted for about 15% of the bank’s new mortgage lending over the past three years.

The bank also said it would exit from its UK based business banking and corporate banking activities. It said its UK based business banking business is mainly a niche sector, relationship led business bank focused on lending to SMEs. Its UK based corporate banking business provides services to UK domiciled corporates operating in a select number of niche areas.

The move does not affect Bank of Ireland’s consumer banking businesses in the UK including its partnership with the UK Post Office, or its businesses in Northern Ireland.
”Bank of Ireland continues to make good progress in implementing the remaining commitments previously agreed under its revised 2011 EU restructuring plan,” the bank said in a statement.

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