BANK of Ireland will ask shareholders to approve changes in its rules which would allow the bank to buy back its own shares and return surplus capital to shareholders, writes Mary Canniffe. At its annual general meeting on July 3rd, the board will ask shareholders to approve changes in its statutes.
Changes were signalled as a possible option last November when the bank announced strong interim results. The board is now seeking to put the facility in place to enable it to return surplus capital to shareholders. In November, Bank of Ireland had capital and reserves of £1.6 billion and a tier one capital ratio of 8.8 per cent, well above the required minimum of 4.5 per cent.
With a large amount of surplus capital, analysts were suggesting some of it should be returned to shareholders. But the bank's statutes did not permit a buy back of, its shares.
A spokesman said yesterday a move to put the facility in place was not a signal that it intended to buy back shares in the short term.
The acquisition of Bristol & West will reduce the bank's tier one capital ratio to between 6 and 6.5 per cent, making a buy back of shares less likely in the short term. But, if the strong profit performance continues, and with B&W expected to enhance earnings by 1997, the likelihood of shareholders getting a return of capital would increase.
