BoI make a last-gasp bid to stop being nationalised
Bosses meet Noonan in plea for time to raise cash from markets
BOSSES at Bank of Ireland yesterday made a last-ditch attempt to ensure their bank doesn't succumb to the wave of nationalisation that's engulfed the rest of the sector.
Chief executive Richie Boucher and chairman Pat Molloy pushed the case for BoI's survival in private ownership at their first face-to-face meeting with Finance Minister Michael Noonan yesterday.
The duo are understood to have used the meeting to impress upon the minister that the bank should be given time to raise cash from the markets rather than taking a state handout. BoI already has €1.4bn in fresh capital to raise after the last round of banking 'stress tests' in November.
When AIB was recapitalised last year, its chief executive departed. However, BoI sources denied Richie Boucher has any such plan.
Sources suggest BoI may need a few billion more when the results of the next stress tests are announced tomorrow.
The sums involved dwarf BoI's current market value of €1.3bn and the bank has already ceded a 36pc stake to the state in previous bailouts.
The bank still believes it stands a fighting chance of avoiding majority state ownership and raising fresh cash from the markets -- if the Government gives it enough time.
BoI is believed to be pushing for an arrangement that would see the Government put in some cash now as a "bridge" until fresh private money could be raised.
This bridge would be designed in such a way that the Government did not own more than 50pc of the bank's ordinary shares, and therefore did not control the bank.
The news comes amid reports that Irish Life & Permanent could end up 90pc owned by the State after it failed the stress tests by some €2bn.
The suggestion that the company could need such a large amount of capital seemed to catch the markets off guard with shares down by almost 20pc in early trading.
The firm has to date not needed any state assistance, but it got a guarantee in September 2008 like the other Irish lenders.
It is understood problems with its tracker mortgage book and its buy-to-let loans were among the factors that have driven its need for capital.
Meanwhile, in order to sell the package politically, the government is anxious to include some form of burden sharing.
Being scrutinised closely is the position of senior unguaranteed bondholders in Anglo Irish Bank and Irish Nationwide.
The Government is conscious that the savings from this source could be small, but the principle of burden-sharing is one that both Labour and Fine Gael espoused during the election campaign.