Lenihan welcomes BoI shareholders’ vote to raise capital

FINANCE Minister Brian Lenihan has welcomed the positive vote by Bank of Ireland shareholders in support for the group’s capital raising.

The bank is to raise €3.4 billion in fresh capital, half of which comes directly from the state and the remainder from the private sector.

The minister said a series of transactions, some of which involve the state through the National Pensions Reserve Fund (NPRF) will be required.

“The transactions will lead to a real strengthening of the bank’s capital ratios and facilitate the bank meeting the credit needs of the Irish economy,” Mr Lenihan said.

As part of the series of deals, a number of steps have now been completed. These include the conversion of preference shares in Bank of Ireland (BoI), worth about €1.036bn, and held on behalf of the state by the National Pension Reserve Fund in return for about 576 million ordinary shares.

Warrants entitling the state to buy BoI shares have been cancelled in return for a payment to the NPRF from the bank of just over €490m. Fees of about €33m have also been paid to the NPRF by the bank.

The annual interest on BoI preference shares held by the NPRF will now increase from 8% to 10.25%.

The next stage of the process is expected to be completed by June 14, the minister said.

That involves the conversion of another €627m worth of preference shares into units of ordinary shares as part of a fully underwritten rights issue.

Another fee of €19m will be paid to the NPRF

At the end of the process, the state will hold a 36% stake in BoI and the bank will have fully met the Financial Regulator’s capital requirement targets announced in March, he said.