State plans more bank stock sales

 

Minister for Finance Michael Noonan said today the State plans to sell a further €6.9 billion tied in Bank of Ireland, AIB and Permanent TSB preference shares and bonds.

He was speaking today after the State sold €1 billion of contingent convertible capital notes in Bank of Ireland in a market placement, netting the State a profit of €10 million. 

Mr Noonan said the State was selling at least half its notes in the bank after receiving "sizable investor interest" late last year.

"Potential investors are tapping into favorable sentiment toward Ireland and Bank of Ireland at the moment in the debt markets," said Eamonn Hughes, an analyst at Dublin-based Goodbody Stockbrokers.

"A deal will reduce the government's exposure to the financial system."

The government acquired the CoCos in Bank of Ireland in July 2011 as part of a €5.2 billion recapitalisation of the nation's lenders following a Central Bank stress test.

The notes automatically convert into equity if the bank's core Tier 1 ratio, a measure of financial strength, falls below 8.25 per cent.

Bank of Ireland is the only one of the country's six largest lenders to escape State control after the Government sold a 34.9 per cent stake in 2011 to five investors, including Toronto-based Fairfax Financial Holdings and WL Ross, a New York-based investment firm.

US billionaire Wilbur Ross, chairman and co-founder of WL Ross, said today's move is a "major step toward the complete privatisation" of the lender.

Bloomberg

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