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AN INVESTMENT CONSORTIUM has agreed to buy up to €1.123 billion of the state’s shares in Bank of Ireland, meaning that the bank will not fall into state ownership as Anglo and AIB have done.
Under the deal, the state’s stake in the bank can only reach a maximum of 32 per cent and means that less public funds will be invested in BOI. The deal is subject to regulatory approval.
Minister for Finance Michael Noonan said in a statement this morning that he welcomed the conclusion of the negotiations as “tangible proof of growing international confidence in the future prospects of both Bank of Ireland and the Irish economy”.
The state’s capital contribution to the bank will fall, if the deal is approved, from the €5.2 billion required after the bank stress tests to €1.7 billion. A recent deal with junior bondholders has already cut the bill by an estimated €2.4bn.
The minister said that the state would not have to seek external funding to make this lower recapitalisation payment.
The deal could significantly affect the percentage of shares held by investors, with existing stakeholders holding a minimum of 31 per cent or a maximum of 71 per cent while the new investors can hold from 14 per cent to 37 per cent.
The state’s share would drop to a maximum of 32 per cent, or a minimum of 15 per cent.
Noonan described this morning’s announcement as a “very positive development for the Irish economy” following on from the recent agreement from EU heads of state to reduce Ireland’s bailout loan rate. The investors involved have not yet been named.
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From €5.2bn to €1.7bn – a savings of €3.5bn
Minister Noonan was looking to cut €4bn in savings in the next budget, well there’s €3.5bn saved. But of course I have a feeling we’re still going to get screwed as I doubt he sees the logic in the above.
This smell’s like another Shamrock corruption enquiry will be had in a year or so, as the Irish people OWNED the bank should the public not know who these investors are?
Hmmm…I wonder will any if the names have previously featured in Tribunal reports, banking scandals or any of the books on who really rules Ireland? The State cleans up the banks, these boys clean up the profits.
Looks like I was wrong. According to the Indo online, it’s Wilbur Ross (king of bankruptcy), Carlyle Group and Cardinal Group, who are trying to get BoI.
When the gov puts in it’s next injection what percentage will we own? The article is not clear about this.
Hi Terry,
The Minister for Finance has indicated that the state (ie us) will hold a maximum of 32 per cent after that recapitalisation ‘injection’.
Any concrete news yet on who the investors are?
Hi Mitchell,
Nothing official yet, but the investors’ names are expected to be released by Friday. It is thought that Fairfax Financial Holdings (a Canadian company) is leading the group. As Conor says above, Ireland’s Cardinal Capital Group and New York’s WL Ross and Co are also thought to be involved.
S.
have your say