Bank of America’s unit in Dublin paid a $2 billion (€1.75 billion) dividend to its UK parent last year, following a shift of its half-a-trillion-euro financial derivatives portfolio across the Irish Sea in recent years.
The unit, Merrill Lynch International Bank Ltd (MLIB) began moving assets from Ireland to the UK in 2013 as part of a move to simplify its company's structure. As a result, it has also been transferring excess capital in the Dublin unit to London.
In 2014, the bank paid a $4.1 billion dividend and repaid $4.6 billion of subordinated debt to its UK parent. Following last year’s dividend payment, the group had $2.2 billion of so-called tier-one capital, a reserve that banks are obliged to hold to withstand unexpected losses.
The latest figures are contained in the 2015 accounts for MLIB, filed in recent days with the Companies Registration Office.
At its height in 2013, MLIB had $593 billion of assets, making it by far the largest bank based in Ireland – three times the size of Bank of Ireland. The business stems from Bank of America's takeover of Merrill Lynch at the height of the financial crisis in 2008, the same weekend that Lehman Brothers collapsed.
As part of a broader plan by the group to simplify its structure, Bank of America decided between 2012 and 2013 to move the derivatives at MLIB to its London operation, as most of this business was created and booked in the UK.
The Irish business was so big at one time that it featured as a “material entity” in Bank of America’s living will, a plan filed with US regulators on how it could be wound down in the event of a repeat of the 2008 crisis. It also featured in European banking stress tests in 2014, given the size of the bank relative to the Irish economy.
MLIB had $1.7 billion of derivatives contracts at the end of December, down sharply from $537 billion at the end of 2011. A derivative is a financial contract between two parties linked to the future value or status of an underlying asset, such as shares, commodities or interest rates.
