Owners of BoI shares vote to go with Nama

BANK OF Ireland shareholders have voted to participate in the National Asset Management Agency (Nama), paving the way for €16 billion of the bank’s loans to be transferred to the State’s bad bank scheme.

At an emergency general meeting (egm) in University College Dublin (UCD) yesterday, Bank of Ireland governor Pat Molloy said he believed the discount that will be paid by Nama for the bank’s loans will not exceed €4.8 billion. This means the bank will take a 30 per cent “haircut” on the loans.

Some 99.9 per cent of shareholders backed the bank’s involvement in Nama. However, in a meeting that lasted almost three hours, several shareholders expressed their anger and dissatisfaction with the performance of the board and what they said was an erosion of shareholder power.

Mr Molloy said there were “significant benefits” to Bank of Ireland arising from Nama. “It improves our prospects of raising capital in the future,” he said. He declined to give details on how the bank planned to strengthen its capital position in the future.

Nama will reduce the bank’s customer loans by up to €14.6 billion, Mr Molloy added. This sum represents the €16 billion in loans to be transferred, less impairment provisions that have already been taken against the loans.

AIB has already voted in favour of participating in Nama. The agency said last week that it expected the transfer of up to €80 billion in toxic bank loans would commence in February.

Mr Molloy said “quite a bit of progress” had been made on the replacement of board members with new faces and more “board rotation” would continue.

Since the banking crisis, four directors have left the board and four new directors have been appointed.

Senator Shane Ross questioned Mr Molloy’s decision to take up his position as governor in July 2009 without first demanding the resignation of directors who were in key positions during a period of reckless lending. These directors include the current chief executive Richie Boucher and retail chief executive Des Crowley, he said.

Senator Ross agreed with Mr Molloy’s statement that “great mistakes” had been made: “The problem is you have 13 of those mistakes sitting beside you.”

On the question of executive remuneration, there would be “no discretionary bonuses at the Bank of Ireland”, Mr Molloy said.

The Bank of Ireland governor said he had taken up the position with “an open mind” but that since meeting the bank’s Nama team, they had his confidence. “As far as the board is concerned, the board has put in an enormous amount of time and effort,” he said.

Shareholders also voted in favour of allowing the board to convene egms with 14 days’ notice, rather than 21, and to allow certain measures to be passed by ordinary resolution, which requires majority approval, rather than special resolution, which requires 75 per cent backing.