Magazine article American Banker

Bank of Ireland Agrees to Keep Capital High at Its N.H. Banks

Magazine article American Banker

Bank of Ireland Agrees to Keep Capital High at Its N.H. Banks

Article excerpt

Bank of Ireland Agrees to Keep Capital High at Its N.H. Banks

WASHINGTON - Prodded by the Federal Reserve Bank of Boston, the Bank of Ireland has agreed to maintain a high leverage ratio at its banks in New Hampshire.

The move is in keeping with regulators' intent to require higher leverage capital - primarily stockholders' equity - at weaker banks.

50% Extra Is Required

The Bank of Ireland signed a written agreement to set its leverage at least 50% above the standard for the strongest banks, reflecting concern about the New Hampshire economy. The Irish bank's U.S. affiliate, First NH Banks Inc. of Manchester, recently grew by about $1.5 billion in assets, to $4.5 billion, with the acquisitions of the failed Amoskeag Bank and BankEast.

The New Hampshire agreement, made public on Thursday, requires tangible Tier 1 capital to equal 4.5% of assets at Bank of Ireland First Holdings, the direct parent of First NH.

That compares with a minimum leverage ratio of 3% for banks that rate the best on the five-point Camel rating scale, which is based on capital, asset quality, management, earnings, and liquidity.

Interpretation of Move

Regulators sought the agreement because "they know New Hampshire and New England aren't going to get good in a hurry," said a First NH Banks official, speaking on condition of anonymity. "They want to make sure that until the situation turns around, there is some kind of capital discipline."

In addition to the consolidated capital requirement, Bank of Ireland agreed to control the ratio of classified loans to capital and loss reserves at each of its three U. …

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