ANALYSIS:THE TIMING of Bank of Ireland's financial year end (March 31st) has again put the bank in a difficult position of facing questions that any bank would struggle to answer at a time of continued uncertainty and volatility, writes SIMON CARSWELL

The bank is the only domestic lender reporting results in the period from the announcement on September 16th of the average “haircut” on loans bound for Nama (National Asset Management Agency) and the end of this calendar year.

Given that Nama is still under construction with many more floors yet to be built, Bank of Ireland remains in the dark on a plethora of crucial issues that will determine its future, whether it needs more capital and whether that cash can be raised from shareholders or whether the bank will have to turn to the State again.

This may explain why chief executive Richie Boucher avoided broadcast interviews yesterday when presenting the bank’s half-year results to September 30th. The bank’s sense was he would be forced into a series of “no comments” that would make for awkward airtime.

This was “an exceptional decision” given the number of “sensitive issues on which they would not be in a position to make any comment”, the bank said.

This didn’t stop Boucher and finance director John O’Donovan answering questions from all media and analysts at briefings. The public just didn’t get to hear their answers.

Boucher is between a rock and hard place. Stockbrokers and market commentators had been clamouring for the bank to tap shareholders for cash in a rights issue before December 31st.

Certainly, the bank would have wanted to raise the required €1.5 billion to repay the Government some of the €3.5 billion bailout to reduce the State’s warrants from 25 per cent to 15 per cent. The bank is in a stronger position than AIB and such a move would have been a further show of strength.

However, Bank of Ireland was always facing an uphill battle to raise capital privately given the glacial pace at which Nama was progressing in the Dáil. Boucher repeated much of what he said at the time of the bank’s September 17th trading statement – there was too much uncertainty and volatility to go to the market to raise further capital. He said the bank would need “a higher degree of certainty on Nama” – what the Government would pay for its loans with a face value of €15.5 billion – and a little more certainty on the EU Commission’s views on a five-year business plan.

The bank only submitted its plan on September 30th to win approval for the recapitalisation.

Given harsh restructuring conditions set recently by the commission on Dutch bank ING as part of its state rescue, the market will seek much more clarity on the EU’s views on Bank of Ireland. Boucher said the bank was starting to provide “some confidence” on future operating profits – a key detail watched by investors that will help absorb some of the forecast €6.9 billion in loan losses over three years to March 2011. But raising capital from investors before December 31st would be tough, he said, because it was “a very narrow window” at a time when markets are much more volatile because “people are making decisions about year-end issues on their own personal portfolios”.

The time had been viewed as ripe by other EU banks as they have planned their own cash calls. “It must have been a fast boat,” Boucher said when asked whether the bank had “missed the boat”.

Boucher said he believed that the bank could raise capital when conditions are right, but many issues, including Nama, were beyond the bank’s control.