Bank of Ireland unveils $4.56 billion fund-raising plan that caps government stake at 36.5 pct

Bank of Ireland unveils $4.56B fund-raising plan

DUBLIN — Bank of Ireland PLC announced Monday it will raise €3.42 billion ($4.56 billion), chiefly by issuing new shares, in a plan designed to boost its cash reserves and cap the government’s ownership stake at 36.5 percent.

Bank of Ireland shares initially fell because the rights issue — if approved at a shareholder meeting May 19 — would mean investors suffer another dilution of their existing shares. But the stock rebounded in afternoon trade, rising 2 percent to €1.83 ($2.44), as analysts forecast that Bank of Ireland will not require any further government bailouts.

Bank of Ireland, the country’s second-largest after Allied Irish Banks PLC, said it would ask existing shareholders to buy up to €1.89 billion in new, discounted shares.

The bank also has agreed to private placings with institutional investors worth €500 million and with the government worth another €1.04 billion.

The institutional investors are to receive 326.8 million new shares for €1.53 each, a 15 percent discount off Friday’s closing price.

The government’s part of the deal would see the state convert much of its current preference-share investment in the bank into 576.8 million ordinary, publicly listed shares costing €1.80 each, Friday’s closing price. The government already owns 34 percent of Bank of Ireland.

Finance Minister Brian Lenihan said Bank of Ireland’s ability to attract new investment from foreign institutions provides “tangible evidence of the growing international and domestic confidence in both Bank of Ireland and our economy.”

“Investors in other countries are saying they’re prepared to risk their money in this bank. This is a clear sign that international confidence in the banking system is returning,” Lenihan said.