Bank of Ireland Bondholders Organize to Join Effort to Inject Required Capital, to Bolster Planned Capital Raising and to Oppose Announced Liability Management Exercise

By White Case On Behalf Of The Boi Investor Committee, PRNE
Thursday, June 9, 2011

NEW YORK and LONDON, June 10, 2011 -

In response to the Bank of Ireland's (BKIR.I) public announcement on 8
June regarding its launch of a Liability Management Exercise (LME), an ad hoc
committee currently comprised of over $1 billion of BOI's LT2 subordinated
notes announced its formation. The BOI Investor Committee, which indicated
that it holds sufficient notes to reject the LME on behalf of nearly all of
the Bank's LT2 subordinated note issues, intends to immediately join
discussions with representatives of the Irish Ministry of Finance and the
Bank regarding efforts to recapitalize the Bank with private funds, which the
LME allows for. If indeed, the BOI Investor Committee's interests are to be
converted to equity, it seeks to convert such interests on fair terms and to
participate in the rights offering along with other stakeholders. This course
of action fully embraces burden-sharing as it will relieve the Irish
government and the Irish taxpayer from the obligation to make further capital
contributions as well as reducing their exposure to potential future losses
that may arise from the Bank's performance. As a preliminary matter, the BOI
Investor Committee is concerned that, instead of engaging the LT2 investors
to see if a market-based, arms-length solution exists, the Bank, with the
apparent support of the Ministry of Finance, has instead defaulted to a
different path - - yet another tax-payer funded bail-out that is regrettably
premised on the improper impairment of creditor rights.

While the BOI Investor Committee is committed to engaging on a
consensual basis, it believes that the Bank's LME is fatally flawed because
it fails to respect the fundamental principle that creditors must be paid
ahead of shareholders. The proposal also runs contrary to opinions expressed
by the European Commission in recent consultative papers on EU banking
policy, as well as precedent established in other recent EU bank
restructurings. In particular, the LME contemplates that BOI LT2 subordinated
capital will suffer as much as an 80% discount while BOI's preferred equity
remains unimpaired and its common shareholders retain significant value. To
force LT2 investors into the deal, BOI is also seeking the right to
repurchase rejecting notes for one penny per EUR1,000 face amount of notes.
The Bank has also indicated that the Finance Ministry will issue a
Subordinated Liability Order (SLO) that would treat the notes even less
favorably, if the LME is not accepted. Such unilateral and coercive action is
a clear abuse of the rish Credit Stabilization Bill of 2010, and breaches the
bondholder contract which is governed by English law.

As has previously been communicated without response, the BOI
Investor Committee asserts that its own private capital and that of others is
available to recapitalize the Bank without the use of public funds - a course
of action that is consistent with the commitments that the Irish Republic has
given to its External Partners, the ECB, IMF and EU. It is also the view of
the BOI Investor Committee that fair terms acceptable to all parties can be
achieved that would also respect the claim priorities of the current capital
structure. Such a solution would leave the burden-sharing ethos of the LME
intact while clearly benefitting tax-payers, the Bank and all of its current

The BOI Investor Committee believes that the BOI and the Irish
Republic represent compelling investment opportunities in their own right and
that their resort to heavy-handed measures as reflected by the LME and the
threatened SLO is counter-productive not only to the Bank's long-term
interests, but also to the ability to attract needed capital for other Irish
institutions. Absent revision, the BOI Investor Committee will reject the LME
and oppose the propriety and enforceability of any SLO the Finance Ministry
may issue. In that regard, the BOI Investor Committee asks that the Bank and
the Ministry of Finance suspend their announced plans until the BOI Investor
Committee has had reasonable opportunity to meet and attempt to formalize the
terms of a privately-funded solution. If a market-based solution can be
achieved, it will inspire and restore investor confidence and hasten the
ability of the Bank and the Irish government to return to the international
capital markets. The BOI Investor Committee believes that its willingness to
share the burden of restructuring by converting its debt claims to equity
reflects substantial commitment to that outcome. The BOI Investor Committee
is fully committed to raising the necessary capital by the July 31 deadline
that has already been set by the Irish authorities.

Holders of LT2 subdebt wishing to join the BOI Investor
Committee, or having questions regarding the noteholders' rights and remedies
should contact the Committee's counsel, Thomas Lauria or Stephen Phillips at
White & Case LLP.

Tom Lauria, White & Case LLP, New York: +1-212-819-2637, Miami: +1-305-995-5282; Stephen Phillips, White & Case LLP, London: +44(0)20-7532-1221

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