It is exactly what you think. it is a move to try and help capitalise the bank.
There hace been many lender who have done this over recent years but as far as I am aware nobody with as big a name as Bank of Ireland.
The deal they are offering is pretty poor compared to what other lenders were offering but then again they are not obliged to offer you anything at all. (Other lenders were reducing mortgage balances by up 50% if they would remortgage with another lender within 3 months) but the deal being offered through another lender is very attractive. If you were looking to remortgage you could do far worse than this on the open market and even though it is a tracker you have no guarantees that lenders own variable rates will not rise in the near future or with Bank of England base rate rises.
I don't know your circumstances but on the face of it I would make the change