THE news that Bank of Ireland (BoI) has secured €2.9bn in fresh funding will be a shot in the arm for the lender and the battered financial sector overall.
Apart from the direct benefit to BoI, the funding also carries some symbolism as it is the first time an Irish bank has raised capital on the open market since the March stress tests.
Analysts, however, are still sceptical that BoI will avoid coming under state control.
While the short-term funding announced yesterday is welcome, the bank still needs to raise €5.2bn in additional capital by the end of next week if it is to avoid de facto nationalisation.
It is hoped a debt buyback plan will raise close to €2bn while a rights issue, which is being underwritten by the Government at 10c a share, will close on July 26.
The bank is aiming to raise around €1.9bn from the offering, but there seems to be little enthusiasm from the market to take it up.
"With the share price trading close to the rights offer level, and sometimes dipping below it over the past few weeks, there really isn't any incentive for investors to subscribe for the new shares," Michael Cummins, a director at Glas Securities told Bloomberg News.
"Majority state ownership would appear the most likely outcome."
Yesterday's announcement was undoubtedly a boost and at least demonstrates Irish lenders can be funded through the open market in the right circumstances -- but the smart money remains on the State taking a majority holding in the lender.
"I'd be surprised if the Government ended up with less than 60pc," said Karl Goggin of NCB.
"Still, it's a result that they'll manage to keep the Government's stake below 75pc, after which they'd have to delist from the main stock markets."