DUBLIN (MNI) – The following is the verbatim text of a statement by
the Central Bank of Ireland on Anglo-Irish Bank capital requirements and
on its review of the capital requirements of other Irish banks:

The Central Bank today (Thursday 30 September) published its
assessment of the capital requirements resulting from the recently
announced restructuring of Anglo Irish Bank.

In addition, the Central Bank has published the outcome of its
review of the capital requirements of those Irish banks subject to the
Prudential Capital Assessment Review (PCAR) exercise, in light of the
estimated remaining haircuts to be applied by NAMA.

Anglo Irish Bank Restructuring

The Central Bank has assessed the injection of capital needed to
meet minimum regulatory requirements under both a base, or central,
scenario, taking account of expected losses, and under a severe
hypothetical stress scenario.

This assessment has been applied to both the proposed Funding Bank
and the Asset Recovery Bank that will be created. The total capital
required for both institutions under the base, or expected loss,
scenario is E29.3billion.

Under the stress scenario, in the event that unexpected additional
losses are incurred, the Central Bank estimates that an additional E5
billion of capital could potentially be required.

A detailed description of the capital requirements and the
methodology used are set out in the attached statement.

Implementation of PCAR Requirements for Irish Banks

The Central Bank has advised the Irish banks subject to the
Prudential Capital Assessment Review (PCAR) that the year-end deadline
for meeting the standards remains in place. The Central Bank has
reviewed the requirements based on the higher NAMA haircuts announced
today and which were not available when the original calculations were
conducted on 30 March.

The outcome of the review is as follows:

AIB

In light of the higher NAMA haircuts, the Central Bank has advised
AIB that it will be required to raise an additional E3 billion by 31
December.

Bank of Ireland

Bank of Ireland already has sufficient capital to meet the PCAR
standard in the light of the higher NAMA haircuts.

EBS

NAMA has not indicated haircut estimates for EBS at this point.
Given the small size of the portfolio of loans, the impact of higher
haircuts is unlikely to be significant. However, the Central Bank has
informed EBS that it will need to take account of higher haircut levels
of up to 60% in its capital planning and it should advise acquirers
accordingly.

IL&P

IL&P does not have loans in NAMA and its PCAR is unaffected.

INBS

A PCAR exercise has not yet been conducted for INBS in light of the
continuing discussion on its restructuring plans.

A more detailed description of the PCAR review is in the attached
statement.

Speaking today, Central Bank Governor, Patrick Honohan, said:
“Taking account of NAMA’s estimates of future haircuts has implications
for required capital injections which need to be acted on now. The new
calculations give clarity and as much certainty as can reasonably be
expected to the budgetary cost of the bank restructuring. The additional
budgetary costs and in particular the higher debt-to-GDP ratio that is
implied — confirm the need for a reprogramming of the budgetary
profile, though it is important to recognise that the bulk of this
reprogramming need arises from other sources. Today’s announcements take
the Irish banking system closer to a final resolution of its
restructuring, which is a prerequisite for sustained economic recovery.”

The Head of Financial Regulation at the Central Bank, Matthew
Elderfield, said: “The assessment we have published today of the costs
of Anglo’s restructuring reflect careful analysis of information from a
range of sources. It also includes a projection based on a prudent
hypothetical stress scenario which gives guidance as to the likely upper
bound of those costs. At the same time, we have today confirmed that we
are pressing ahead with our plans to require the Irish banks to meet
more rigorous capital requirements which are closely aligned with the
new international standards set by the Basel Committee and to do so by
the year end. As part of this process, we have advised the banks that
they need to take account of developments in the NAMA haircuts which
have occurred during the course of the year. This ensures that the
banks’ year end capital position fully meets the objectives of our
Prudential Capital Assessment Review process.”

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