Friday 23 February 2018

Boost as BofI on clear path to share sale

Joe Brennan

Bank of Ireland may continue to count €1.8bn of state-owned preference shares as core Tier 1 capital, a measure of financial strength, if they are sold to private investors, according to a European regulatory ruling.

Shares in the country's largest lender gained on the news.

Bank of Ireland "noted the confirmation on the EBA (European Banking Authority) website that state aid instruments issued prior to January 1, 2014 and initially subscribed by a member state would continue to be grandfathered if sold to private investors," the bank said in response to questions.

"This regulatory clarification allows the bank to move forward and place the Government-preference shares with debt investors," said Ciaran Callaghan, an analyst with Merrion Capital in Dublin.

"It also avoids the scenario of existing shareholders being diluted and potentially allows the State to monetise its residual Bank of Ireland investment over coming weeks," he added.

Bank of Ireland has said that it was looking at a number of options in terms of refinancing the preference shares.

That could see the bank going to the markets soon to raise funds equivalent to a quarter of the bank's present market capitalisation.

Still, most analysts have speculated that this would not be a big problem for the bank as long as the lender could continue to count €1.8bn of state-owned preference shares as core Tier 1 capital.


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