BoI pulls stock alternative offer

MARKET volatility has forced Bank of Ireland to pull the offer of a stock alternative to its dividend.

Davy analyst Scott Rankin said the move by the bank is “unusual” but was the right thing to do.

Last month Bank of Ireland announced a final dividend for the year to March 31, 2008 of 39.4c per unit of ordinary stock and subsequently a stock alternative offer priced at €8.10 per unit, rather than a cash dividend.

However, the bank said that since then, continuing market volatility has resulted in a significant decline in the value of many financial stocks, including Bank of Ireland, which makes the stock alternative unattractive relative to current market prices.

“As it is not possible under the bank’s bye-laws to reset the price, the directors have decided, in the interests of stockholders, to withdraw the stock alternative offer and to pay the final dividend of 39.4c per unit of ordinary stock wholly in cash,” the bank said in a statement yesterday.

In the case of future dividends, it said it remains the directors’ intention to offer a stock alternative.

Mr Rankin said it is a sign of the times that Bank of Ireland has done this and considering the volatile share prices at the moment it was the right thing to do.

“We’re in very unusual times at the moment. It has been an awful six weeks for bank stocks,” he said.

The value of Bank of Ireland has fallen by more than €9 billion over the last 12 months, mirroring the performance of AIB which has also seen over €9bn wiped off its value.

Meanwhile, Bank of Ireland also announced the creation of a retail and leisure sector team based in London.

Earlier this week workers at Bank of Ireland voted in favour of a 24-hour work stoppage on July 8 — the same day the bank holds its annual general meeting.

The Irish Bank Officials Association said 92% of its members working at the bank voted in favour of taking limited industrial action in protest at the reduction in bonuses this year.

This move was condemned yesterday by employers group IBEC saying the move was “out of step with business reality”.

IBEC director Brendan McGinty said: “The position being adopted by the bank officials union is a throwback to 1970s style industrial relations which has no place in the modern Ireland.”


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