Who is Bank of Ireland lending to?

Bank of Ireland reported its interim results this morning, announcing a hefty €979 million pre-tax loss. For the sake of rounding lets call it a billion euro. The markets have reacted well pushing Bank of Ireland shares up about 18 per cent at the time of writing. Effectively a pre-tax loss in this range had been expected.

More interesting Bank is refusing to do any media interviews on “legal advice” so the media are left to wade through the 81 page “Interim Statement for the 6 months ended 30 September 2009” for details on the bank’s performance.

Most Irish business owners will be interested on the statement’s about the bank’s business lending:

“Gross new lending to SMEs in the first 6 months of our financial year was over €1.5 billion, with overall SME overdraft / working capital facilities / limits available to customers up 18% on 2008 levels. We continue to process over 6,000 credit applications each month with consistently high levels of approvals maintained over the period. We have opened 12,000 business current accounts since April 2009. Bank of Ireland is very much open for business and committed to supporting our customers.”

I have no doubt that if the bank says it has lent  €1.5 billion to businesses it has. But I wonder just what proportion of its lending is in private equity deals overseas. As we reported in August Bank of Ireland was part of a syndicate of banks that supported the €133 million acquisition of German company Kalle by Silverfleet Capital, a buyout firm. A bank spokesperson said each of the banks contributed about €25 million, so that’s a fair chunk of the €125 million.

Given the €3.5 billion in Government support Bank of Ireland has received (not to mention the bank guarantee) taxpayers might expect some more explicit detail and evidence that it is supporting the real Irish economy.