Bank of Ireland's (the "Bank") Annual Report for the year ended 31 December 2011, states that the outstanding subordinated liabilities in issue amount to €417 million. Adjusting for fair value accounting (€8 million) and excluding preference stock (€39 million) which is not a debt instrument, results in an outstanding unguaranteed subordinated debt amount of €370 million. As previously noted to the Deputy, it is not for the Minister to comment of the investment decisions made by the holders of subordinated debt in the Bank. The powers granted pursuant to CISA continue to be in effect and will be used in the future if necessary.
With regard to achieving burden sharing with subordinated bondholders in all of the banks including the Bank, I draw the deputy's attention to the fact that total capital generated from burden sharing with bond holders since 2008 is in excess of €15 billion. In relation to the Bank's €4.2 billion regulatory core tier 1 capital requirement arising as a result of the 2011 Prudential Capital Assessment Review ("PCAR 2011"), the net cost to the State was €0.2 billion which was sized to maintain a minimum 15% shareholding in the Bank and is less than 5% of €4.2 billion requirement.
As a first step to meet the PCAR 2011 €4.2 billion of regulatory core tier 1 capital, the Bank took various burden sharing measures with subordinated debt holders. This generated ca. €2 billion of capital for the bank. On 11 July 2011 the bank announced the size of the rights issue which was sized by reference to the remaining capital required for PCAR 2011 less the value of the remaining subordinated debt (€0.5 billion) where it was intended to seek further burden sharing.
As a result of further subordinated liability burden sharing in August and September 2011 the bank's remaining capital required to meet PCAR 2011 reduced to €350 million. As the deputy is aware, I noted on 23 November 2011 that the Bank had to raise this €350 million of core tier 1 capital by 31 December 2011 to satisfy the requirements of PCAR 2011. In that context I considered using the powers available under the Credit Institutions (Stabilisation) Act 2010 as amended ("CISA") to apply for a Subordinated Liabilities Order ("SLO") to generate, from subordinated liabilities, the residual capital required by the Bank by 31 December 2011.
On 2 December 2011, the Bank announced that it had raised approximately €350 million of core tier 1 capital, through its tender offer and purchase of capital market securities issued by the Bank. As previously noted to the Deputy, as a result of the Bank's announcement and the fact that the totality of the outstanding PCAR 2011 capital required by 31 December 2011 had been raised, the grounds for use of the powers under CISA to raise that capital through burden-sharing no longer arose.