FSA says ‘no’ on Bank of Ireland

Posted by Tracy Alloway on Jun 27 11:01.

A swift response from the UK’s Financial Services Authority for once.

Holders of Bristol & West permanent interest-bearing shares (Pibs), a type of subordinated debt, last week asked the FSA to look into Bank of Ireland’s debt restructuring.

BoI took over Bristol & West in 2007, which means the bonds (originally issued under English law) are now part of the rather clumsily-structured exchange offer, or part of BoI’s efforts to claw back some €2bn through burdensharing.

This was the FSA’s response, as encapsulated in a background note:

It does not appear to the FSA that the activities involved in the Bank’s proposal of 8 June 2011 amount to regulated activities falling within the FSA’s regulatory scope laid down by Parliament under the Financial Services and Markets Act 2000.

The Bonds are listed on the Official List of the FSA, but we are not aware of any circumstances that suggest that the prospectus issued in 2007 at the time of the substitution did not comply fully with the disclosure provisions applicable to a debt prospectus as set out in the Prospectus Rules. Therefore the FSA’s position is that these activities are not within the scope of its regulatory powers and thus it is not able to intervene.

As of Friday, the first tender deadline, 72.4 per cent of bondholders had agreed to sell their bonds back to the bank at deep discounts. Over 95 per cent of those bondholders opted to be paid in bank shares, rather than in cash. That is of course, the option not available to smaller investors, under a Brussels directive that prevents them from accepting a debt-for-equity swap. Nevertheless, the relatively high take-up in the preliminary tender does not bode well for hold-outs, including those pensioners.

Don’t expect the bondholding retirees to go quietly into the burdensharing night, though.

On Sunday, representatives of the group regrouped to pen Mr Sants a letter of their own

Related links:
Hedge funds vs Bank of Ireland – FT Alphaville
UK pensioners 1 Irish bank 0 – FT Alphaville
Brussels setback for small BoI investors – FT

This entry was posted by Tracy Alloway on Monday, June 27th, 2011 at 11:01 and is filed under Capital markets. Tagged with , , , , .

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