Bank of Ireland increased its holding of Irish Government bonds by a nominal €1.2 billion since the January, according to a circular sent to shareholders in advance of a June 18th shareholder meeting.

The meeting has been called to approve the bank’s role in the purchase of a Government bond from Irish Bank Resolution Corporation to help the State avoid the €3.06 billion cash payout due on the Anglo promissory notes.

Shareholders were told in the circular the purchase of the bonds from IBRC “exposes the bank to an increased risk in the event of Irish sovereign downgrade or default”.

The bank will swap the 2025 bonds from IBRC for cash at the European Central Bank in a year-long deal that the bank says will earn it €38.7 million.

The lender had Irish Government bonds with a carrying value of €4.7 billion at the end of last year, including €500 million held by Bank of Ireland Life.