Bank of Ireland considers sale of up to €400m in shares

Bank of Ireland is considering selling as much as €400 million of shares to appease national regulators as part of a plan to repay a portion of its government bailout, according to people familiar with the matter.

The Central Bank is pressing the lender to refinance some of the €1.8 billion State-owned preferred shares through a sale to bolster equity capital levels, said the people.

Irish taxpayers put €4.8 billion into Bank of Ireland since 2009 and received €3.8 billion in cash repayments to date.

Chief executive officer Richie Boucher is seeking to wean the bank off State support, and the bank could use the proceeds of the share sale to retire some of the government's preferred shares.

Preferred shares
In response to questions, Bank of Ireland pointed to its November 1st comments on a European Banking Authority ruling on the preferred shares.

The EBA said last month that the preferred shares would still count as core Tier 1 capital, a measure of financial strength, if sold to private investors.

“The group continues to proactively formulate and assess a range of options in relation to the 2009 preference shares, with our assessment of such options carefully taking into consideration our various stakeholders, including the regulatory authorities,” the bank said yesterday.

The ruling prompted analysts, including Philip O'Sullivan at Investec, to speculate that the lender might not need to carry out a share sale to help refinance the preference shares.

Bank of Ireland will probably sell shares through a placement with institutional investors rather than a rights offering if it proceeds with a plan to raise equity by the end of the year, according to the people.

Shareholder approval
The bank has shareholder approval to place as much as the equivalent of 5 per cent of its shares, currently equating to about €400 million.

The government’s preferred shares only count as core Tier 1 capital reserves to the end of 2017 under incoming international banking rules, according to the European Banking Authority. – (Bloomberg)