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Thursday 8 December 2016

BoI will seek Davy's help in drive to raise €4.2bn

Stockbroker to assist stricken bank increase its equity capital

Published 22/04/2011 | 05:00

DUBLIN broker Davy is expected to be added to the ticket for Bank of Ireland's upcoming €4.2bn capital-raising drive, joining UBS, Deutsche Bank and Credit Suisse in the line-up.

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Industry sources yesterday said BoI may appoint one other core adviser to the fundraising drive and would also get specialist advice on particular asset sales.

The news comes three weeks after the latest banking 'stress tests' mandated BoI to increase its equity capital by €4.2bn and take a €1bn 'contingent convertible' loan from the State.

BoI has to sell off about €30bn of non-core assets over the next three years so that it only has €122.50 on loan for every €100 it has on deposit.

At the bank's recent results announcement, chief executive Richie Boucher indicated that UBS, Deutsche Bank and Credit Suisse were likely to feature on the panel for the fundraising drive.

All three were also involved in BoI's 2010 capital raise.

The Irish Independent has now learned that Davy's is also working with BoI in recent weeks and is expected to feature when the bank unveils its capital raising plans over the coming weeks.

A spokeswoman for the bank said no advisers had been appointed and declined to comment further. A spokesman for Davy also declined to comment.

Davy is likely to help the bank to tap investors who would be open to buying new shares in BoI either through a rights issue for existing stockholders or a private placement for new comers.

BoI is already actively engaging with potential investors.

The bank is also hoping to raise as much as €2bn in capital by offering a 'debt for equity' swap to investors who hold about €2.6bn of junior debt.

London sources said BoI had spoken "openly" about a possible debt-for-equity swap at the investor roadshow for the recently-reported 2011 results.

Investor appetite is unclear for the swap. Sources said that some had been buying into BoI's junior debt in recent weeks with a view to participating in the offer.

But others said it was hard to see value in any offer given the uncertainty about the recovery of the Irish market and BoI's return to profit.

The bank's capital strategy also includes some asset sales, and BoI yesterday announced that it had sold its 50pc stake in Paul Capital to management.

"The group's share of Paul Capital's net assets was €10m at 31 December 2010, and therefore the disposals will have a negligible impact on the Group's capital position," the bank said in a statement.

BoI has also put its UK asset-based lender Burdale on the market, as well as its international project finance units -- those deals will have a more material impact on the capital target.

Irish Independent

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