Saturday 23 September 2017

Up to 33 Bank of Ireland executives may get golden handshakes if sacked

PROJECT FORTRESS: B of I shares dipped below 10¢
PROJECT FORTRESS: B of I shares dipped below 10¢
Nick Webb

Nick Webb

Thirty-three senior executives at the Bank of Ireland are entitled to "golden handshakes" worth more than €200,000 each should they get sacked by the bank.

The future of some key players at the bank was under increased focus late last week as it looks almost certain that the bank will fall into majority state ownership as investors shun its €1.9bn rights issue. Bank of Ireland passed European stress tests last Friday.

The rights issue -- codenamed "project fortress" -- is looking decidedly wobbly as the eurozone debt crisis spreads to Italy. Last week Bank of Ireland shares fell below the crucial 10¢ level at which investors are being asked to buy shares. The rights issue was initially priced to give a near 14 per cent discount to investors in a bid to persuade them to back the deal.

The State is committed to step in to buy up any shares shunned by investors under an underwriting agreement. The National Pensions Reserve Fund already holds a 36 per cent stake in the bank but this could rise to nearly 70 per cent if the rights issue bombs. Analysts believe that about 20 per cent of ordinary shareholders will take up their rights -- there are tax advantages -- which will mean the State will end up with a 60 per cent stake.

In correspondence with Finance Minister Michael Noonan, it has emerged that the bank must ramp up its lending to the credit-crunched SME sector, with €3bn in lending this year, €3.5bn next year and €4bn in 2013.

The bank is also facing potential claims for deferred payments from 14 people, with one US based individual seeking $325,000 from the bank.

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