Boucher plays hand well
Since taking over from Brian Goggin as Bank of Ireland boss 15 months ago, Richie Boucher has played a bad hand well. Last week's placing and rights issue gives Ireland's oldest financial institution a fighting chance of staying out of majority state ownership.
Under the plans announced on Monday, Bank of Ireland will raise almost €500m from an issue of new shares to private investors and up to €1.89bn through a rights issue from existing shareholders. It is also converting some of the State's preference shares into ordinary shares and is paying the State €491m to cancel the warrants allowing it to buy 25pc of Bank of Ireland's shares.
Between the jigs and the reels the State will end up with a 34.3pc shareholding in Bank of Ireland, which will also meet the stringent new capital requirements imposed by the Financial Regulator.
The downside is that, even if they take up their rights, existing shareholders are facing the prospect of heavy dilution.
If they take up their rights they are facing dilution of up to 47pc.
If they don't then they will be diluted by 95pc.
The question existing Bank of Ireland shareholders have to answer is, having seen their investment lose 90pc of its value over the past three years, do they chase their losses?
Or will they simply conclude that they are throwing good money after bad?