BoI shares dip as Fairfax halves holding

Shares in Bank of Ireland plummeted almost 9% yesterday on the back of Canadian insurer Fairfax Financial Holdings selling half of its 5.8% stake.

The Canadian property and casualty insurer run by investor Prem Watsa sold 935 million shares for 36 cents apiece — more than triple what it paid in 2011, Reuters has reported.

The fluctuation in share price is in keeping with share placings in recent years, according to Goodbody Stockbrokers analyst Eamon Hughes.

The day after Bank of Ireland’s annual results last year, WL Ross and Fairfax both placed 3% holdings, or a combined 2.08 billion shares, at just shy of 33c with shares eventually trading down 12% over the next three weeks, Mr Hughes said.

Bank of Ireland shares were down 6% at 36.2 cents yesterday morning following the sale, which was managed by Deutsche Bank, and later fell another 2.5% as towards the close of trading.

Fairfax bought an 8.7% stake in 2011 as part of a consortium including US billionaire Wilbur Ross when the shares were trading at 10c, and cut that to 5.8% last year.

The 2011 consortium bought a 35% stake in the months after Ireland signed up to an EU/ IMF bailout in a deal that kept the bank out of state control.

Ross sold his last 5.5% stake in Bank of Ireland last June at 26.5c per share.

The bank recently reported a return to profit of €921m last year representing its first full-year profit since 2010.

Total revenue was €2.97bn for 2014 as opposed to €2.64bn the previous year while more than 55% of its full-year profit was achieved through a combination of the writeback of loan provisions and gains arising from changes to bond holdings as well as the increasing value of its Nama bonds.

At the time, BoI chief executive Richie Boucher defended the bank’s policy on not writing off debt saying that it was a more consistent approach than the case-by-case policy followed by its competitors.

Mr Boucher also stated his regret over the role the bank played in the financial crisis and the subsequent support from the State it required.

The State currently owns a 14% stake in the bank which is managed through the Ireland Strategic Investment Fund.