BoI in talks to raise capital

Bank of Ireland confirmed this morning that it has begun talks with investors to raise capital, which would see the State remain a minority shareholder.

The bank said it was looking at a number of different options, including a rights issue, a placing to institutional investors, a conversion of part of the State's preference stock into ordinary equity and selective liability management, which could include buying back or swapping debt to raise capital.

"Based on the current envisaged structure, the bank expects that the state would continue to be a minority shareholder in the bank," it said in a statement.

The bank needs to raise €2.7 billion of capital to meet new capital requirements set out by the Financial Regulator following the transfer of loans to the National Asset Management Agency (Nama). The extra capital is designed to protect solvency and help banks absorb losses.

Bank of Ireland will transfer €12 billion worth of loans to Nama, and has said it will be able to raise the additional capital required.

AIB, which will transfer €23 billion in loans to Nama in total, has to raise an additional €7.4 billion in capital. The sale of businesses it owns in the US, Britain and Poland will not raise enough capital, however, and the State may be forced to take a majority stake in the bank.