Sale of shares earns Bank of Ireland €1.73 billion

BANK of Ireland, the country’s biggest lender by market value, has raised €1.73 billion in a share sale, boosting capital after losses surged.

Bank of Ireland sold 2.97 billion new shares, or about 95% of the securities on offer, it said yesterday in a statement.

The bankers managing the sale sold the remaining 168.6 million shares at 75 cent apiece, a premium of 20 cent to the rights offer price of 55 cent.

The lender is raising a total of €3.4bn after it sold toxic real estate loans at a discount to the so-called bad bank, the National Asset Management Agency.

Finance Minister Brian Lenihan said in March that Ireland’s banks need €31bn in capital after “appalling” lending left the country’s financial system on the brink of collapse.

The capital “will leave the bank in a strong position to compete in the Irish banking market,” analysts led by Kevin McConnell at Bloxham Stockbrokers said.

The new shares are expected to start trading on June 14, the company said.

Bank of Ireland last month announced the 3 for 2 rights offer at a price of 55 cents per new unit of ordinary stock.

Bank of Ireland rose as much as 4 cent to 80 cent in Dublin and traded at 77.5 cent to close up 2%. Allied Irish Banks Plc rose 5.68% to 93 cent, while Irish Life & Permanent Plc climbed less than 1% to €1.67.

Bank of Ireland also placed shares with a group of institutional investors, exchanged some of its Tier 1 and upper Tier 2 bonds to raise capital and converted some of the Government’s preference shares into equity. The state has a 36% stake in the lender.

The bank is being advised by IBI Corporate Finance and Credit Suisse Group AG. Credit Suisse, UBS AG, Deutsche Bank AG, Citigroup Inc and Davy are acting as joint book runners and underwriters, the bank said in April.

“The two biggest headwinds left facing Bank of Ireland are the challenging funding environment coupled with the risk of residual loan losses remaining high,” said analyst Ciaran Callaghan at Dublin-based NCB Stockbrokers in a note yesterday. “The former may prove to be more difficult to overcome.”

Irish banks have €74.2bn of senior debt and interbank lending covered by the Government’s guarantee and support schemes maturing before October 1, Mr Lenihan said on June 2. He didn’t say how much the lenders have already refinanced.

With banks hoarding cash and the market for new bank bonds frozen, the cost of insuring against losses on European corporate bonds has risen over the last month, credit-default swaps show.

More in this section

Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from, as chosen by our editor, direct to your inbox every Monday.

Sign up