Banks register €5bn in notes with ECB

Bank of Ireland and AIB registered €5 billion of government-backed notes to be eligible as collateral for European Central Bank loans.

Bank of Ireland listed €2.5 billion of three-month floating-rate notes on the Irish Stock Exchange, it said in a filing. AIB, which is struggling to avoid full nationalisation, said separately it listed €2.5 billion of three-month fixed-rate notes.

Since January 1st, the ECB has stopped accepting securities in currencies other than the euro as collateral in repurchase operations, the main avenue Irish banks use to fund themselves.

"This is probably a way of replacing non-ECB eligible collateral," said Peter Chatwell, a strategist at Credit Agricole Corporate and Investment Bank in London.

Bank of Ireland's issue is one of four totaling €9.2 billion and is replacing securitised notes in pounds backed by the lender's UK mortgage book, said Anne Mathews, a bank spokeswoman in Dublin.

The AIB deal is "an own-use uncovered bank bond guaranteed by the government, which gives us access to ECB operations to obtain funding", said AIB spokesman Ronan Sheridan.