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March 31, 2010    

Bank of Ireland sees no end to economic crisis

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by Kay Murchie

The Bank of Ireland has today reported a loss of €3 billion (£2.6 billion) in the first nine months of its financial year, with write-downs totalling €4 billion.

In a statement, the bank said: “Revenues remain under pressure, in particular due to higher funding costs as we continue to extend the maturity profile of our wholesale funding.”

It also said it would need to raise €2.7 billion to strengthen its balance sheet and is in talks with investment banks to raise capital after selling property loans to Ireland’s “bad bank”.

Richie Boucher, chief executive, said there is no let up from the ongoing crisis in the Irish economy, which has been referred to as the ‘Celtic Tiger’ due to the years associated with its rapid growth experienced in the late 1980s and the early 1990s.

However, ‘the boom’ or ‘Ireland’s Economic Miracle‘ has been hit by the housing market crash and a year ago, the country’s Government unveiled an emergency budget after admitting that the country’s budget deficit was spiralling out of control.

The country’s woes led Nobel Prize-winning economist Paul Krugman, to say that the Irish economy will take almost five years to recover.

The economy has been one of the worst performers in the western world this year but has now emerged from what was one of Europe’s worst recessions.

Meanwhile, Mr Boucher said: “There was a further contraction in the level of economic activity across our core markets in Ireland and the UK and difficult economic conditions globally.”

The bank’s UK interests include running the banking products and credit card services of the Post Office.

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