Bank of Ireland says adequately capitalised

DUBLIN (Reuters) - Bank of Ireland (BKIR.I) said on Thursday it was adequately capitalised and able to absorb loan losses after the government's pledge to inject 3.5 billion euros (3.1 billion pounds).

The government is planning to inject 3.5 billion euros each into Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I) in return for guarantees on lending, executive pay and mortgage arrears will restore confidence to the financial system.

"Bank of Ireland is adequately capitalised on the basis of receiving this 3.5 billion," chief financial officer John O'Donovan told a news conference call.

"It's well able to absorb any loan losses that we might expect to see in this cycle," he added.

The government had said in December it planned to invest 2 billion euros each in Bank of Ireland and Allied Irish Banks.

Denis Donovan, chief executive of Bank of Ireland's capital markets division, said the 3.5 billion figure had been agreed upon with the government, adding that it was "an appropriate figure."

"Equity markets have been very weak and really as a practical matter it would not have been possible to go to market and to seek support from shareholders," he said.

Donovan said the bank had taken soundings from shareholders.

"A rights issue at the prevailing prices that we are now experiencing would leave open the theoretical possibility of being nationalised and that was an outcome we wanted to avoid in all circumstances," he said.