Bank of Ireland shares fall as Fairfax sells half its stake

Bank of Ireland’s shares dropped on Friday as Fairfax Financial Holdings, one of the companies behind a rescue investment in the bank in 2011, put half its remaining stake on the market.

Fairfax, founded by Canadian billionaire Prem Watsa, hired Deutsche Bank to sell 415 million Bank of Ireland shares at 23 cent each, according to sources, which will reduce its holding from 2.9 per cent to about 1.5 per cent.

Shares in Bank of Ireland fell as much as 5.8 per cent in Dublin to 23 cent, though it rallied off its lows to close down 2.9 per cent as the share sale was easily absorbed by the market.

Mr Watsa, together with New York billionaire Wilbur Ross, had led a €1.1 billion investment by five investment firms in Bank of Ireland in 2011, which resulted in them taking a combined 35 per cent stake. The deal, at 10 cent a share, helped the bank, led by chief executive Richie Boucher, avoid nationalisation as the State took over the rest of the system.

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Fairfax originally had an 8.7 per cent stake, but cut its holdings in share placings over the past two years at between 33 cent and 36 cent.

Rollercoaster ride

Bank of Ireland’s shares have had a rollercoaster ride since Fairfax was last in the market in March last year. The stock fell to as low as 15.8 cent in August amid fears about how Irish banks can rebuild their loan books against Central Bank mortgage restrictions, uncertainty caused by Brexit, and a collapse in bond yields, which resulted in Bank of Ireland’s pension gap doubling in the space of nine months to €1.45 billion at the end of September.

However, the shares have subsequently rebounded strongly from their lows as banking stocks internationally have been helped by a rebound in bond yields, while Irish lenders have been helped by moves by the Government and Central Bank to make it easier for first-time buyers to get mortgages.

Meanwhile, Mr Ross (79), who exited his entire investment in Bank of Ireland in 2014 making an estimated €500 million profit in the process, has emerged in recent weeks as US president-elect Donal Trump’s pick for commerce secretary.