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Possible U.S. money heading for Bank of Ireland

June 23, 2011

By Staff Reporter

Bank of Ireland was being tight lipped this week on reports in Irish newspapers that it is in advanced talks with a number of private equity investors in the U.S. who are interested in taking a significant stake in the bank, which has been underpinned by the Irish government since before the ECB/IMF bailout.

The Sunday Business Post reported that ongoing talks had “advanced significantly over the past week” while the Irish Examiner reported Monday that a spokesman for the bank said that it had “no comment” on the talks.

“The bank is currently grappling to raise €4.2 billion in fresh equity in order to meet the new capital requirements set out by the Financial Regulator at the end of March this year, the Examiner reported.

Citing the Business Post, the report added that the bank, led by chief executive Richard Boucher, is said to have held talks with a number of U.S. private equity firms including Texas pacific, run by Ryanair investor and chairman, David Bonderman.

Added the Examiner report: “Over the weekend the bank gave a strong indication that the state, which currently holds 36 percent of the bank’s equity, might be preparing the ground to sell a large portion of its stake in BOI in order to facilitate the buy-in of the private equity firms.

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“On a further update of its capital raising plans issued to the stock exchange on Saturday, the bank said the government was taking an option to gain another 15 percent stake in the bank ahead of the planned rights issue, on top of the 36 percent it already holds.

The (Sunday Business Post) report said the added 15 percent option was to increase the state’s flexibility to allow private equity investors take a big chunk of the bank’s shares at a later date.

The Post’s report quoted unnamed sources but the Examiner said it was understood that the bank was close to a deal that would ensure it remains independent, unlike AIB (Allied Irish Bank) which is now over 92 percent state owned.

“The Sunday Business Post, without naming its sources, said the talks had advanced significantly in the past week and that the government had committed to selling a significant amount of its shares after a rights issue next month,” the Examiner report stated.

However, it added that the uncertainties raised by the Greek bailout and its potential impact on the markets in coming weeks could tilt the Bank of Ireland deal “either way,” this according to sources.

Concluded the Examiner report: “If agreed, the new buy-in could give the U.S. investors holding about 30 percent of the bank’s equity. It would also help reduce the state’s funding liability and position the bank to go to the market to borrow in the years ahead.”

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