Almost 140,000 First Active shareholders will make between €3,069 and €6,138 each if a deal agreed yesterday between the bank and the Royal Bank of Scotland goes ahead.
The announcement of yesterday's €887 million offer by the Scottish banking group - the biggest corporate deal in Ireland this year - triggered a 32 per cent rise in First Active's share price.
Shareholders are being offered €6.20 for each share they hold, a 33 per cent premium on last Friday's closing price of €4.65. The stock closed at €6.13 in Dublin yesterday, up €1.48.
The money, which will be paid early next year, follows the €160 million which shareholders received in June. This allocation was worth between €550 and €1,100 per shareholder.
The former members of the First National Building Society were given free shares when First Active floated on the Irish Stock Exchange five years ago yesterday.
Subject to regulatory and shareholder approval, the Royal Bank of Scotland takeover could be completed in January 2004, with the cash payments following within two weeks.
Royal Bank of Scotland, which owns Ulster Bank and is the world's fifth biggest bank, said the deal would involve several hundred job losses. The Irish Bank Officials Association (IBOA)insisted there could be no compulsory redundancies.
Royal Bank chief executive Mr Fred Goodwin said the offer was "very attractive" for First Active shareholders. "I don't think they will have too much difficulty working that out."
Royal Bank's offer is considered to be a fairly full price. First Active shares were first offered to customers and the public at £2.25 (€2.86) when they traded in Dublin in October 1998.
The bank struggled after the flotation and was restructured by a new management team led by First Active chief executive Mr Cormac McCarthy. Over the past three years it has closed branches and cut hundreds of jobs as part of a restructuring programme.
Commenting on the deal yesterday, Mr McCarthy said it created an opportunity for shareholders to crystalise significant value on their investment in First Active.
"This rewards our loyal base of individual shareholders, many of whom hold less than 1,000 shares," he said.
Royal Bank of Scotland intends to retain the Ulster Bank and First Active brands but has warned that there could be hundreds of job losses as a result of the integration of aspects of their operations, such as head office functions, technology and other back-office tasks. Mr Goodwin said the bank was buying First Active as a long-term investment.
There had been speculation that the Royal Bank of Scotland was seeking to sell Ulster Bank. Mr Goodwin said he hoped this deal would finally persuade everyone that it was a force in the Irish banking market.
Together, the two financial institutions will have 1.3 million customers, 262 branches and 5,600 employees. First Active has established a strong business in mortgages and savings while Ulster Bank specialises in providing banking products to personal and business customers. The bank, which will become one of the four dominant players in the Irish mortgage market, is expected to compete aggressively for business.
When the takeover is completed First Active will become part of Ulster Bank group and its listing on the Irish and London Stock Exchanges will be cancelled.