Bank of Ireland on Wednesday reported a loss of €1.47 billion ($2 billion) for the final nine months of 2009 as it booked impairment charges of just over €4 billion on bad loans.
The earnings report came a day after the Irish government announced plans to pump more billions into the shattered banking sector and unveiled its terms for taking on the most toxic debts.
The bank has changed its financial year to coincide with the calendar year, as other Irish banks do, and did not detail comparisons for the final nine months of 2008.
During the fiscal year ending March 31, 2009, Bank of Ireland made a profit of €18 million, with impairment charges amounting to €1.44 billion.
Irish Finance Minister Brian Lenihan announced on Tuesday that the state's "bad bank" - The National Asset Management Agency - would take on €1.93 billion of Bank of Ireland's loans and ultimately assume a total of €12 billion off the bank's balance sheets.
The value of Bank of Ireland's bad loans was discounted by 35 per cent, which the bank will record as a loss. At that, Bank of Ireland fared better than other banks, which on average had their bad loans discounted by 47 per cent.
Lenihan said Bank of Ireland needs to raise €2.7 billion by the end of the year to meet new capital requirements, and expects to raise a substantial amount from private sources.
Lenihan said the government would convert its preference shares in Bank of Ireland to ordinary shares, and expects to remain a minority shareholder. "I believe that Bank of Ireland has a strong future", Lenihan said in the Dail, the Irish legislature.
"In recapitalizing Bank of Ireland we will secure an institution that will maintain a presence in the international capital markets, provide loan finance to individuals and businesses and support our economic recovery".
Richie Boucher, Bank of Ireland Group Chief Executive, said he believed that impairment charges had peaked on loans which will not be transferred NAMA.
"Trading conditions in the first quarter of our 2010 financial year remain challenging. Revenues remain under pressure, in particular due to higher funding costs as we continue to extend the maturity profile of our wholesale funding", Boucher said.