Bank of Ireland in one-for-30 share consolidation
Bank of Ireland shareholders are to receive one new share for every 30 shares in a corporate reorganisation announced yesterday.
The move will not affect the value or proportion of stakes held by individual shareholders, but the consolidation of shares will mean that the new individual shares trade at around €7 each, rather than the 23 cent that the existing shares trade at.
The State will remain Bank of Ireland's biggest shareholder, with a 14pc stake, for example, even though it will hold 97pc fewer shares.
A proposed balance sheet overhaul will also see the bank establish a new Irish-incorporated group holding company to issue bonds and shares at a remove from the cash of ordinary savers, to meet new rules brought in after the crash.
Bank of Ireland said it had filed an application with the High Court to commence the process. The new shares will be in the stock market-listed Bank of Ireland Group plc, which will become the 100pc owner of the existing ordinary stock of the bank.
The changes to the corporate structure will happen by July, pending court approval and the green light from an extraordinary general meeting (EGM) of shareholders.
AIB previously consolidated its shares to create a more manageable number of shares in issue. Both banks ended up with extraordinarily high numbers of shares in issue because new stock was issued during the bail-outs every time cash from the State was pumped in to support the banks' equity.
As such, the latest consolidation is part of Bank of Ireland's normalisation.
The bank said it would position the share price "in a range that is more appropriate to the size of the Group".
For retail investors, it will make comparisons with AIB easier. AIB shares traded at just over €5 each yesterday.
A higher share price may also reduce some of the day-to-day volatility in Bank of Ireland shares, where the tiny denomination means very small changes in money terms translate into big percentage swing.
The latest proposals were agreed with regulators at the European Union's Single Resolution Board - which oversees Bank of Ireland in the Republic and throughout the eurozone, and by the Bank of England, which regulates the UK.
The changes to the holding company structure will allow bondholder risk to be better isolated within the bank capital structure and are being made to comply with new rules on bank bail-ins, Bank of Ireland said.
Dates for court hearings and for the EGM have not yet been scheduled, a spokesman said.
The timing means the changes will happen under the watch of outgoing Bank of Ireland chief executive Richie Boucher, who has announced plans to stand down at the end of the year.