Discount may be less than 30% - BoI

Bank of Ireland said the discount applied to loans it will transfer to the National Asset Management Agency (Nama) could be less than the 30 per cent haircut the Government estimated will apply across the industry.

The bank also said it could raise capital internally or through access to capital markets if required.

Nama is to purchase loans with a book value of about €77 billion from Irish banks for an estimated €54 billion. Bank of Ireland is expected to account for about 21 per cent of the loans to be transferred to Nama. Bank of Ireland's loans have a book value of €16 billion.

The writedown on the loans could be between €1.2 billion and €1.4 billion, the bank said in a statement today.

The transferred loans represent about 12 per cent of Bank of Ireland's total customer lending as of March 31st, 2009.

In its statement, Bank of Ireland said its figures indicated the final discount applied to its loans would fall below the 30 per cent cited by the Minister for Finance Brian Lenihan in the Dáil yesterday for the loans to be taken on by Nama.

"The final discount will only be known on completion of the relevant due diligence and the transfer of the loans to Nama," the bank said.

Only 31 per cent of Bank of Ireland's loan book was associated with land, while development accounted for 32 per cent.

The bank said it would transfer loans to Nama on a phased basis, with the process mostly completed by 2010.

At 12.30pm in Dublin Bank of Ireland shares were trading up 11 per cent at €3.20 with over 16 million shares traded.