Bank of Ireland repayment plan starts
Bank of Ireland is to start repaying bailout money to the State, it announced today.
The bank has announced details of a plan that will mean a fundraising of €580m and the acquisition of the Government’s €1.8bn of preference shares in the bank
While the fundraising will be used to buy up some of the preference shares, the balance will be sold to existing shareholders.
The preference shares date back to when the bank received billions in bailout funding from the State in 2009.
Private investors bought into Bankof Ireland back in 2011.
Shareholders include US investor Wilbur Ross and Canada’s Prem Watsa.
“Over the past four and a half years the bank has taken a number of significant steps to normalise its relationship with the state. This capital package is a very material part of the normalisation,” the bank said.
Full details of the plans and the return to the State will depend on the outcome of two separate capital market book build exercises that will now be conducted by a consortium of banks, the Department of Finance said today.
Commenting on the news, Michael Noonan, Finance Minister said: “I am pleased to announce that agreement between the Department of Finance and Bank of Ireland on the State’s exit from the Preference Share investment has been reached. The successful conclusion of this transaction will see the State recoup a premium on its €1.8bn investment thus generating a profit for the taxpayer.”
He added that as Ireland exits the EU/IMF/ECB bailout programme on December 15, the move will build further confidence in Ireland’s recovery and will strengthen Ireland’s return to normal market funding.
“The Irish banking system is recovering, international investors are returning and this has positive implications across the banking system.”
The State will retain its stake its 15pc stake in the bank as part of the deal that had to be completed by the end of March 2014.
Bank of Ireland was one of several banks bailed out by the State following the collapse of the financial system in 2008.
Shares in Bank of Ireland were off 2.2pc at 26c shortly after 8am. Source: The Irish Independent.