BoI silent on potential US deal

BANK of Ireland refused to comment on weekend reports that it is in advanced talks with a number of private equity investors in the US interested in taking a significant stake in the bank.

The Sunday Business Post reported yesterday the on-going talks “advanced significantly over the past week”.

Last night a spokesman for the bank said “it had not comment to make” on the talks.

The bank is currently grappling to raise €4.2 billion in fresh equity in order to meet the new capital requirements set out by the Financial Regulator at the end of March this year.

The bank led by Richie Boucher, chief executive, is said to have held talks with a number of US private equity firms including Texas pacific, run by Ryanair investor and chairman, David Bonderman, according to the Business Post.

over the weekend the bank gave a strong indication that the state which currently holds 36% of the bank’s equity might be preparing the ground to sell a large portion of its stake in BOI in order to facilitate the buy in of the private equity firms.

On a further update of its capital raising plans issued to the stock exchange on Saturday the bank said the government was taking an option to gain another 15% stake in the bank ahead of the planned rights issue, on top of the 36% it already holds.

The report said the added 15% option was to increase the state’s flexibility to allow private equity investors take a big chunk of the bank’s shares at a later date.

Yesterday’s report quoted unnamed sources but it is understood the bank is close to a deal that will ensure it remains independent unlike AIB which is now over 92% state owned.

The Sunday Business Post, without naming its sources, said the talks had advanced significantly in the past week and that the government had committed to selling a significant amount of its shares after a rights issue next month.

One reliable source told the Irish Examiner yesterday that the 15% option highlighted the distinct possibility of the potential deal being done with private equity players in the US.

The report yesterday stressed no deal has been done and warned of sensitivities surrounding the buy in by US private equity groups.

The uncertainties raised by the Greek bail out and its potential impact on the markets in coming weeks could tilt the deal either way sources said.

If agreed the new buy in could give the US investors holding about 30% of the bank’s equity.

It would also help reduce the states funding liability and position the bank to go to the market to borrow in the years ahead.

It is thought the bank will try to raise €2bn from the rights issue and to claw back a similar amount through renegotiation of its existing debt.

The Business Post also said that, despite the underlying uncertainty surrounding Greece, international investors in question, are becoming more positive about the ability of Irish banks to bring their balance sheets up to the more exacting international standards now demanded following the global banking crisis.

However, the report stressed that no deal has been done at this point despite detailed talks undertaken by the bank with the potential investors.