Business Irish

Sunday 4 December 2016

Bank shares are volatile as BoI begins disposal of €30bn assets

Published 05/04/2011 | 05:00

Bank of Ireland jumped more than 9pc yesterday as the markets continued to cheer the stress tests. Photo: Getty Images
Bank of Ireland jumped more than 9pc yesterday as the markets continued to cheer the stress tests. Photo: Getty Images

SHARES in Allied Irish and Bank of Ireland jumped more than 9pc yesterday as the markets continued to cheer the stress tests.

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But Irish Life & Permanent had another torrid session, plummeting 25pc to 13c to make one of the country's most widely owned shares almost valueless.

The moves came as BoI kicked off the sale of its €3bn global project finance business with Ireland's only home-grown independent bank battling to offload €30bn of "non-core" assets.

A spokesman for the bank last night confirmed that Deutsche Bank had been appointed to handle the sale of BoI Global Project Finance, which financed a host of high-profile projects, including the development of Arsenal Football Club's Emirates Stadium.

A separate project finance division based in Ireland is unaffected by the move. The bank has also appointed advisers Hawkpoint to sell its UK asset finance business Burdale.

The two assets are first to go on the block because their "niche" nature makes them easier to sell than many of Bank of Ireland's other loan books and assets.

Market sources stressed that any benefit from the sales would help BoI hit the "deleveraging" targets outlined in the latest bailout deal but would not materially impact the bank's €4.2bn capital raising.

Under the "deleveraging" plan, BoI must offload €30bn of loans so that it will only have €122.50 loaned out for every €100 on deposit by the end of 2013.

The capital plan requires the bank to raise €4.2bn from private investors by June or take a fresh injection from the Government and risk majority state ownership.

Since the on-the-market businesses are not expected to sell for more than their book value, analysts are not expected BoI to reap a significant capital gain from the sales.

Irish Independent

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