Ex-BoI director plans other investments

US investor Wilbur Ross has ruled out a future investment in AIB, although he is looking at other possible investments in Ireland.

“We would be interested in other Irish investments but given my familiarity with Bank of Ireland’s plans I think it would be inappropriate to become involved with a competitor,” Mr Ross told the Irish Examiner.

Mr Ross was a director of Bank of Ireland from 2011 until Monday night when he announced that he would sell his remaining 5.5% stake in the bank.

Deutsche Bank placed his shareholding on the market yesterday with an offer price of 26.5c, which generated €477m for the US investor — a threefold increase on his original punt.

Mr Ross was one of three investors to pay €1.1bn for a 35% stake in the bank in 2011. Last March, he sold 2bn shares in the bank, along with fellow investor Fairfax, for €656m. They originally bought the shares for 10 cents.

In what is seen as good news for the Government, Bank of Ireland shares remained much more resilient than had been expected following yesterday’s sale. The shares fell 3.2% on the day.

One Dublin-based investment source said if the shares had dropped more sharply, it could have delayed the Government’s planned divestment of its remaining 14% stake in the bank until 2015. This sale will likely take place later this year, according to the source.

Another Dublin-based fund manager speculated that the removal of Mr Ross from the share registrar could presage a change of management at Bank of Ireland sooner than expected.

One of the conditions for Mr Ross’s original investment was the retention of Richie Boucher as chief executive. “The departure of Wilbur Ross means that an important political ally for Boucher is gone. With the banking inquiry coming up, he may decide that he would like to leave sooner then planned. That could pave the way for Patrick Kennedy to take over as chief executive in 2015.”

Mr Kennedy announced in April that he would stand down in 12 months as chief executive of Paddy Power.

There is still no clarity on what type of institutions took up Mr Ross’s shareholding. If it is long only funds, then the share price will remain stable. However, if it was taken up by hedge funds, then it could lead to a bout of share price instability.

Fairfax chief executive Prem Watsa told Reuters the company will retain its shareholding in Bank of Ireland. It is not known at this stage if it increased its shareholding yesterday.

Merrion Stockbroker analyst Ciaran Callaghan said Mr Ross’s decision to sell his shares is not motivated by looming problems for Bank of Ireland.

There are now a number of banks in other periphery countries that are in a similar position to the way Bank of Ireland was in 2011, Mr Callaghan said.

Mr Ross’s directorship of Bank of Ireland limited his involvement in other financial institutions.