Extraordinary General Court And Annual General Court

Transcription

1 Extraordinary General Court And Annual General Court 19 May 2010 SUPPORT STABILITY STRENGTH

2 Important notice This document has been prepared by The Governor and the Company of the Bank of Ireland (the "Company") solely for use at a presentation in connection with the proposed issue of new ordinary stock (the "New Ordinary Stock") of the Company by way of a placing and rights issue (the "Offering"). For purposes of this notice, the presentation that follows (the "Presentation") shall mean and include the slides that follow, the oral presentation of the slides by the Company, the question-and-answer session that follows that oral presentation, hard copies of this document and any materials distributed at, or in connection with, that presentation. By attending the meeting at which the Presentation is made, or by reading the Presentation slides, you will be deemed to have (i) agreed to all of the following restrictions and made the following undertakings as well as all other conditions agreed to in connection with your acceptance of your invitation to this confidential presentation and (ii) acknowledged that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the Presentation. The Presentation is private and confidential, has been furnished to you solely for your information and may not be reproduced, redistributed or disclosed in any way in whole or in part to any other person without the prior written consent of the Company. The maintenance of the absolute secrecy of the information contained in the Presentation is of paramount importance to the Company, its business and financial prospects and any unauthorised disclosure of such information by any recipient of the Presentation may constitute a criminal offence. You will be required to return any hard copies of this document at the conclusion of the meeting. You are hereby notified that the information contained in the Presentation may constitute "inside information" in relation to the Company or its securities within the meaning of Part V of the Criminal Justice Act 1993, as amended from time to time, and disclosure of such information any constitute a criminal offence under the laws of the United Kingdom and of Ireland. Disclosure of or dealing on the basis of such information may also constitute "market abuse" within the meaning of the Financial Services and Markets Act 2000 and/or violate market abuse law in Ireland (under the Market Abuse (Directive 2003/6/EC) Regulations 2005 of Ireland and/or otherwise). This document does not constitute the provision of investment advice under the European Communities (Markets in Financial Instruments) Regulations (Nos 1 to 3) 2007 of Ireland by the Bank of Ireland ( the Company ) or any other person connected with the Offering or any other person. Your obligations as set out in this notice will continue in respect of the information contained in the Presentation until such time as, and then only to the extent that, any such information is made available to the public. The Company may not be making the information contained therein public, except to the extent required by law or regulation. If this is not acceptable to you, you should not receive the information contained herein. The information contained in the presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. None of the Company, IBI Corporate Finance Limited nor any of Citigroup Global Markets U.K. Equity Limited, Credit Suisse Securities (Europe) Limited, Deutsche Bank AG, London Branch, J&E Davy, or UBS Limited (the "Underwriters") or any of their affiliates, directors, officers, employees, agents or any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of the presentation or its contents or otherwise arising in connection with the presentation. In particular, without prejudice to the generality of the foregoing, no representation or warranty if given as to the achievement or reasonableness of any future projections, management estimates, prospects or returns contained in this presentation. The information and opinions contained in this presentation do not purport to be comprehensive, are provided as at the date of the document and are subject to change without notice. Neither the Company, nor IBI Corporate Finance Limited, nor the Underwriters are under any obligation to update or keep current the information contained herein. 2

3 Important notice The presentation does not constitute or form part of and should not be construed as, an offer to sell or issue, or the solicitation of an offer to buy or acquire, securities of the Company in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Any decision to purchase new ordinary stock as part of the offering must be made solely on the basis of the information to be contained in the prospectus in connection with the offering which is available on the Company's website at and at the Company's registered office provided that the Prospectus will not be available (whether through the website or otherwise), subject to certain exceptions, to investors in the United States, Switzerland, Canada, Japan, New Zealand or South Africa. The presentation contains certain forward-looking statements regarding the belief or current expectations of the Company, the Directors and other members of its senior management about the Company s financial condition, results of operations and business and the transactions described in this presentation. Such forwardlooking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and are difficult to predict, that may cause the actual results, performance, achievements or developments of the Company or the industries in which it operates to differ materially from any future results, performance, achievements or developments expressed or implied from the forward-looking statements. A number of material factors could cause actual results to differ materially form those contemplated by the forward-looking statements. This Presentation is made to and is directed only at persons (i) in the United Kingdom having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 and to those persons to whom it can otherwise lawfully be made or distributed and (ii) in Ireland who are "professional clients" as defined in Schedule 2 of the European Communities (Market in Financial Instruments) Regulations (Nos 1 to 3) 2007 of Ireland (together "Relevant Persons"). This document should not be acted upon by persons who are not Relevant Persons. If you are within the United States, by attending the presentation, or reading the presentation slides, you will be deemed to have represented you are a "qualified institutional buyer" as defined in Rule 144A under the U.S. Securities Act of 1933 as amended (the "U.S. Securities Act") and you should not take such actions if you cannot make this representation. This is not an offer for sale of securities, nor a solicitation to purchase or subscribe for securities, in the any jurisdiction. The new ordinary stock referred to herein have not been, and will not be, registered under the U.S. Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States, except pursuant to an applicable exemption from the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Company does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities law. This document is also not for publication, release or distribution, directly or indirectly, in the United States, Switzerland, Canada, Japan, New Zealand or South Africa or any other jurisdictions where to do so would constitute a violation of the relevant laws of such jurisdictions nor should it be taken or transmitted, directly or indirectly, into the United States, Australia, Switzerland, Canada, Japan, New Zealand or South Africa. 3

4 Important notice The Underwriters are acting exclusively for the Company in connection with the offering and no one else and will not regard any other person as a client in relation to the offering and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for providing advice in relation to the offering or any matters referred to in this Presentation. Apart from the responsibilities and liabilities, if any, which may be imposed on each of the Underwriters by the Financial Services and Markets Act 2000, the European Communities (Market in Financial Instruments) Regulations (Nos 1 to 3) 2007 of Ireland or the Investment Intermediaries Act 1995 of Ireland, the Underwriters accept no responsibility whatsoever for the contents of the Presentation. The Underwriters, the Company and IBI Corporate Finance Limited accordingly disclaim all and any liability whether arising in tort, contract or otherwise (same as referred to above) which they might otherwise have in respect of the Presentation. None of the Minister for Finance, the Department of Finance, the Irish Government, the National Treasury Management Agency, the National Pension Reserve Fund Commission or any person controlled by or controlling any such person, or any entity or agency of or related to the Irish State, or any director, officer, official, employee or adviser of any such person (each such person, a "State Entity") accepts any responsibility for the contents of, or makes any representation or warranty as to the accuracy, completeness or fairness of any information in, this Presentation or any document referred to in this Presentation or any supplement or amendment thereto. Each State Entity expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of the Presentation. No State Entity has authorised or will authorise the contents of the Presentation, or has recommended or endorsed the merits of any course of action contemplated by the Presentation. 4

5 Helen Nolan Group Company Secretary 5

6 Today s business Introduction and outline of today s order of business Time 11.00am Extraordinary General Court (EGC) Presentation and Overview of Proposals Questions and Answers Overview of Resolutions 1 to 8 and Voting Conclusion of EGC 11.20am 1.00pm 1.15pm Break coffee and tea in the Conservatory Annual General Court (AGC) Overview of Resolutions Questions and Answers Overview of Resolutions 1 to 6 and Voting Conclusion of AGC 1.15pm to 1.30pm 1.30pm Refreshments in the Conservatory 3.00pm 6

7 Pat Molloy Governor Extraordinary General Court 7

8 Capital raise What is happening today? Seeking stockholder approval to raise 3.56 billion of equity capital Why? Proposals should make the Bank a stronger company for the benefit of all our stockholders Directive from the Financial Regulator for banks to hold higher levels and better quality of capital Position the Bank strongly to support the recovery in the Irish economy Why now? Achieved clarity on key issues of uncertainty for investors Greater certainty regarding the medium term outlook SUPPORT STABILITY STRENGTH

9 Why raise the capital now? Key issues clarified NAMA Non-NAMA loan impairment Financial Regulator Pension Scheme EU Economy Strategy Expected loss on disposal of total assets to NAMA within existing guidance Tranche 1 transferred Re-affirmed September 2009 guidance of 4.7bn for non-nama loans for the 3 years to 31 March 2011 Completion of Financial Regulator s Prudential Capital Assessment Review (PCAR) of Bank of Ireland s capital requirement Completed pension scheme review solution in progress to eliminate IAS 19 pension deficit Visibility on EU Restructuring Plan Signs of economic stabilisation Business, funding and liquidity strategies in place 9

10 Proposal to raise 3.56 billion of equity capital Firm Placing to Private Investors Firm Placing to State Debt-Equity Swap Rights Issue State Rights Issue Stockholders Total Capital Raise 0.5bn 1.04bn 0.29bn 0.63bn 1.1bn 3.56bn To complete by 8 June 2010 To complete by 8 June 2010 Successful Firm Placings to Private Investors / State and Debt-Equity Swaps* (non US) complete subject to stockholder approval and admission to listing Firm Placing to Private Investors significantly over-subscribed State committed Stockholder participation in Rights Issue fully underwritten by international investment banks and sub-underwriters Rights Issue enables stockholders to participate in the capital raise proposals All of the Proposals are subject to stockholder approval *Note: Early acceptances of the US Debt for Equity Offer announced on 10 May 2010, final announcement of take-up of the US Debt for Equity Offer on 9 June

11 Non pre-emptive Placing What is a pre-emptive right? A pre-emptive right is the right belonging to existing stockholders to avoid involuntary dilution of their ownership stake by giving them the opportunity to buy a proportional interest of any future issuance of ordinary stock Why do the proposals include a non pre-emptive Placing? A conventional Rights Issue on its own is not deemed feasible given the quantum of capital to be raised and the structure of our share register The amount of capital to be raised of 3.56 billion, including 491m to buy back warrants, is significant relative to our market capitalisation Private market underwriting of Rights Issue essential not deemed possible without a Firm Placing Board mindful of keeping dilution to existing stockholders to a minimum capped placing notwithstanding considerable unsatisfied demand warrant buy-back Size and pricing of Firm Placing to Private Investors is comparable to other recent combined firm placing and rights issue transactions in the UK SUPPORT STABILITY STRENGTH

12 Rights Issue Enables the Bank to raise additional capital by offering new stock to existing stockholders Subject to stockholder approval, you will receive important documents in the coming days If you held shares on the record date, 5pm on 17 May 2010, you will qualify to participate in the Rights Issue* Existing stockholders are being offered the opportunity to purchase 3 new shares for every 2 shares held at a significantly discounted price of 0.55 per share which compares to the closing share price of 1.53 on 14 May The new shares can be purchased between 20 May 2010 and 11am on 8 June 2010 by taking up your Rights. Your options: Take up all of your Rights Take up some of your Rights Sell all of your Rights Take up some of your Rights and / or sell some or all of the balance of your Rights Do nothing The Rights Issue is in any case fully underwritten Please read carefully the documents you will receive any questions please consult your financial advisor or call our help-line on tel: or free-phone *Note: subject to certain regulatory restrictions Remember your rights have a value. If you don t take up your rights you can sell some or all of them. 12

13 How are stockholders being impacted by the Proposals? The level of State ownership, on a fully diluted basis, remains broadly the same after the Proposals are implemented maximum ownership of 36% Warrants cancelled State investment of 3.5 billion in 2009 Preference Stock reduced to 1.84 billion Existing private stockholders before the Firm Placing to Private Investors and the State, own c. two-thirds of the bank on a fully diluted basis; after the Firm Placing and warrant cancellation and before the Rights Issue existing private stockholders own c. 48% Where stockholders take up their Rights their stockholding will remain at c. 48%. Ownership dilution is not the same as economic dilution you will own a smaller stockholding in a stronger Bank with more equity capital The Proposals today are key for the future of the Bank and should make the Bank a more valuable company for all our stockholders SUPPORT STABILITY STRENGTH

14 What has happened to my stockholding? Value 5.0bn** Value 5.0bn** Private Placees 16% Private Placees 16% State 36% State 36% Value 2.3bn* State (fully diluted) Existing Stockholders 34% 66% Existing Stockholders 48% Underwriters / Sub underwriters Existing Stockholders 29% 19% Before Pre Capital Launch Raise After Existing Capital Shareholders Raise -take Existing up theirafter Existing Capital Shareholders Raise - Existing do not take Stockholders rights taking up their Stockholders up their do rights not take up rights their rights Existing investors will have a share of a stronger well capitalised Bank *Note: Market capitalisation on 14 May 2010 based on closing market price of 1.53 per unit of stock and fully diluted number of shares (i.e. where the State converts their warrants to ordinary stock) **Note: Theoretical Market Capitalisation based on total number of stock in issue following the Placing and Rights Issue and warrant cancellation valued at the theoretical ex-rights price of 0.94 per unit of stock on 14 May

15 Greater certainty regarding the medium term outlook Attractive medium term investment case Economy stabilising road to recovery identified and being implemented Core portfolios / businesses identified Platform to expand Group net interest margin Progressive reduction in non-nama impairment charges Rigorous cost and risk management Sustainable funding strategy Robust capital Highly attractive target financial returns SUPPORT STABILITY STRENGTH

16 Financial targets 2013 Measure 31 December Target Net interest margin 1.59% annualised In excess of 1.75% Cost / income ratio 56% < 50% Impairment charge* 4,055m Normalised**** Equity Tier 1 capital 5.8%** > 7% Group loan / deposit ratio 152% <125% Return on equity*** Negative Low teens to mid teens % *Note: Impairment charge on loans and advances to customers **Note: Pro forma at 31 December 2009 reflecting debt for debt exchange in February 2010 ***Note: ROE excluding 2009 Preference Stock ****Note: Expected that impairment charges on non-nama loans peaked in 2009 and to reduce progressively in 2010, 2011 and

17 Conclusion The Bank has made significant progress on our strategic objectives As a result Bank of Ireland is a stronger Bank well capitalised focused on our core retail and commercial franchise sound businesses healthy funding supporting our customers capable of producing sustainable profits Today s meeting is about taking decisions as stockholders to strengthen the capital base of the Bank As a strengthened Bank we believe we will be capable of delivering highly attractive financial returns for our stockholders over time SUPPORT STABILITY STRENGTH

18 Questions and Answers 18

19 EGC Resolutions 19

20 EGC Resolutions Resolutions 1 to 7 are inter-conditional Resolution 1 Ordinary To approve the Renominalisation of Ordinary Stock Resolution 2 Ordinary To increase the Bank s authorised capital stock Resolution 3 Special To adopt the new Bye-Laws Resolution 4 Ordinary To issue Ordinary Stock and disapply pre-emption rights to effect the proposals, excluding the Government transaction Resolution 5 Ordinary To issue the Allotment Instrument in respect of Allotment Instruments Stock necessary to effect the Debt for Equity Offers Resolution 6 Ordinary To issue Ordinary Stock pursuant to the proposals at a discount of more than 10% to the middle market price Resolution 7 Ordinary To approve the Government Transaction as a related party transaction pursuant to the Listing Rules, issue Ordinary Stock at a discount of more than 10% to the middle market price and disapply pre-emption rights in respect of the Government Transaction and to approve the Warrant Cancellation Resolution 8 Special To reduce stock premium 20

21 Voting 21

22 EGC concludes Tea and Coffee in the Conservatory Our Annual General Court will commence at 1.30pm 22

23 Annual General Court 23

24 Overview of AGC Resolutions Resolution 1 Ordinary To receive the Report and Accounts Resolution 2 Ordinary To receive the Report on Directors Remuneration Resolution 3 Resolution 4 Ordinary Ordinary To elect Pat Molloy as a Director To re-elect the following Directors by separate resolutions: Dennis Holt Richie Boucher Des Crowley Denis Donovan Paul Haran Rose Hynes Jerome Kennedy Heather Ann McSharry John O Donovan Patrick O Sullivan To authorise the Directors to determine the remuneration of the auditors Resolution 5 Special To determine the re-issue price range of treasury stock Resolution 6 Special To maintain the existing authority to convene an EGC by 14 days notice 24

25 Questions and Answers 25

26 AGC Resolutions Resolution 1 Ordinary To receive the Report and Accounts Resolution 2 Ordinary To receive the Report on Directors Remuneration Resolution 3 Resolution 4 Ordinary Ordinary To elect Pat Molloy as a Director To re-elect the following Directors by separate resolutions: Dennis Holt Richie Boucher Des Crowley Denis Donovan Paul Haran Rose Hynes Jerome Kennedy Heather Ann McSharry John O Donovan Patrick O Sullivan To authorise the Directors to determine the remuneration of the auditors Resolution 5 Special To determine the re-issue price range of treasury stock Resolution 6 Special To maintain the existing authority to convene an EGM by 14 days notice 26

27 Voting 27

28 Conclusion of AGC Refreshments in the Conservatory 28