BoI ability to raise capital underlines its strength -- Lenihan
Chief executive: Richie Boucher
Capital required: €2.7bn
Loans going to NAMA: less than €12bn
Discount on first NAMA loans: 35pc
Published 31/03/2010 | 05:00
BANK of Ireland chief Richie Boucher will today signal that the lender has a plan to raise €2.7bn it needs, as soon as it gets the green light from Brussels.
It is understood that the European Commission is preparing to deliver its view on the bank's crucial state-aid restructuring plan within weeks.
BoI stands out among all of five participants in the NAMA project in that the amount of capital it is being required to raise by the Financial Regulator is not in excess of what was expected.
The discount faced on the first batch of its NAMA-bound loans stands at 35pc -- well below the 47pc average for the industry.
"I have been advised that Bank of Ireland expects to be able to raise private capital and is well advanced in its actions to address its capital needs, which I believe underlines the strength of the institution," Finance Minister Brian Lenihan said yesterday.
He also confirmed that the State plans to convert some of its €3.5bn existing investment in the bank into ordinary shares as part of the massive fundraising. It is believed that taxpayers' stake in BoI will come in below the 40pc level as a result.
BoI was not able to make any comment last night, ahead of the release this morning of figures for the nine months to the end of December.
The bank's capital raising plan is made up of three key elements.
The first involves the Government converting over €1bn of its preference shares in BoI into ordinary shares.
Four major investment banks, Credit Suisse, UBS, Deutsche Bank and Citigroup, are being lined up to advise and guarantee the sale of up a further €1bn-plus of shares to existing stockholders.
Finally, BoI is expected to raise about a further €500m by asking holders of some of its riskier bonds to convert into actual shareholders.
"In recapitalising Bank of Ireland, we will secure an institution that will maintain a presence in the international capital markets, provide loan finance to individuals and businesses and support our economic recovery," said Mr Lenihan.
It is also understood that the European Commission, as part of its detailed review of BoI's state aid restructuring plan, is demanding that it sell off its British business bank and mortgage book.