The Government’s full stake will be made known after today’s rights issue deadline, but will fall between 15% and 32.4%.
It means Bank of Ireland will remain the only Irish bank not in state ownership. Currently, the state controls 36% of Bank of Ireland and it was feared this could rise to 70%.
A high take-up of the bank’s Government-underwritten rights issue has been doubted and the minimum state shareholding in the bank will only come about via a high take-up.
However, either way, the deal will result in less taxpayer money propping up the lender and minimum private-sector ownership in Bank of Ireland of 68%.
Finance Minister Michael Noonan said it is “tangible proof” of growing international confidence in the bank and the economy.
“The commitment by a number of significant private-sector investors to invest side-by-side with the state’s retained holding, without any form of additional risk sharing by the state, reaffirms the credibility of our stress tests and the health of our banks... It further underlines how we are successfully breaking the link between bank risk and the sovereign,” he said.
At Bank of Ireland’s EGM earlier this month, chairman Pat Molloy said the board hadn’t ruled out further private equity funding, but warned that the Government’s share of the bank could increase.
Yesterday, Bank of Ireland said the deal represents a “major endorsement” of its strategy.
The taxpayer’s burden of the €5.2bn recapitalisation target, which the bank needed to meet by the end of this month, has already been lessened by the burning of junior bondholders.