Bank of Ireland A strategy to move forward

Areas for Review Irish Government Ownership Wholesale funding Rebuilding Trust in the market Continued Growth & Focus on Non Irish/Domestic Business

Wholesale Funding At 30 th June 2010 BoI ratio of loans and advance to customers (excl assets held for sale to NAMA) to Customer deposits was 143% – Nov 12 th it’s now 160% Heavy reliance on wholesale funding – 59% of this wholesale funding has maturity of <1 year Large exposure to bond market uncertainty surrounding Irish Government backed bonds. – Irish Govt bond yields have peaked at over 9% this year – E.g. CDS (credit default swap) on BoI have being trading in the region of 816 bps Increased cost to BoI for participaitng in Govt guarantee scheme First time buyer mortgage rates vary from 3% -4% (per BoI website), and then up to 5% for buy to let. – Therefore large, costly maturity/funding mismatch Recommendation: – Increase overall net interest margin, by greater ability to influence and control margin received on loan books, e.g. RoI Mortgage Book currently has circa 60% of Customers on Tracker products – the more Customers moved off this and on to Fixed products will allow greater ability to forecast and manage margin. – Obtaining Deposits (assuming post current crisis) that are not rate led, or at least are at more normalised levels, i.e. profitable. – Continue efforts to dispose of non essential elements of the Group, as identified in the EU Restructuring Plan – BIAM (already sold), New Ireland Assurance, ICS Mortgages, etc., in an effort to further shrink the Balance Sheet.

Rebuilding Trust in Bank of Ireland Rebuild trust both domestically and internationally, in Consumer, Business and Corporate Customers. – Demonstrate an ‘Open for Business’ message by supporting Customers in difficulty; – Remain competitive and attractive in chosen markets; – Identify new and emerging markets, and become primary provider in these markets – e.g. Energy efficiency home/business improvements (recent ESB Halo Home Improvement Loan, Green Mortgage), Save to Borrow Consumer lending (Credit Union model, of driving deposits from Customers, to enable demonstration of repayment capacity, thereby proving greater ability to approve lending); – Promote multiple product holding, through rewarding loyalty and supporting Customers, throughout their life stages, e.g. Student, Graduate, Young Family, etc.

Continued Growth & Focus on Non Irish/Domestic Business UK Post Office Asset Finance NI & in the UK, this is additional to BIF (Bank of Ireland Asset Finance)