The Bank of Ireland's successful RMBS tender offer on its Kildare and Brunel securitization programs is likely to be followed by more similar offers as banks continue to work to meet new capital requirements.
The Bank of Ireland accepted tenders on approximately 23% of outstanding securities (€1.15 billion) at prices ranging from 33% to 92% of par, according to a Henderson Global Investors report. By repurchasing at a discount and then cancelling the securities, the bank was able to raise approximately €350 million of core Tier 1 capital, by market estimates.
According to the Henderson report, one market participant said that the transaction was the 43rd tender, with a total face amount of greater than €12 billion, involving ABS or RMBS since the beginning of 2009.
"In our view, it is difficult to screen the most likely candidates for ABS tenders, because of the complexity of the assessment whether such tender is beneficial or not from regulatory capital and/or accounting point of view, " Bank of America Merrill Lynch analysts said.
The only significant risk transfer would allow for regulatory capital reduction relative to the regulatory capital requirement before securitization, according to BofAML.