merrion street

"Today is an important milestone on the path to full independence for our banks. It is the first time since October 2010 that Bank of Ireland has been able to access international term debt markets in a benchmark public issue. I understand that 98% of the interest in these bonds came from foreign investors. This issuance is further evidence of the strengthening and normalisation of our banking system. It is a clear show of confidence in the restructuring of the sector and its viability into the future by international investors.

The commitment from investors of €1 billion in unguaranteed Irish bank paper is important in decoupling the Sovereign from the banks. It is a step towards their full return to wholesale markets, independent of State support. The strong investor appetite, as demonstrated by the fact that this issuance was close to 2.5 times oversubscribed, is an expression of confidence in the Irish economy.

This deal is an important part of the normalisation of the banking sector. In a normally functioning and healthy banking sector there will be a certain level of debt raised by the banks. Indeed, given the limited pool of deposit funding in the Irish banking sector, there is a need for financing from international sources to free up credit flow to the economy. Access to international markets at sustainable rates is vital to the viability of the banking sector.

This issuance further reinforces the pricing of Irish risk among international investors. Recently, Irish risk has benefitted from the commitment by the Heads of State and Government to improve the sustainability of the Irish programme as well as the announcement by the ECB of the Outright Monetary Transactions, as evidenced through lower yields on Irish Sovereign bonds. The improvement in funding conditions for Ireland is not solely attributable to these events; a significant part of the improvement is due to hard won confidence as a result of the determined actions taken to repair our economy."