The news saw investors make a grab for shares in the country’s biggest lender, whose stock closed up three per cent, having reached a high of 11 cents, or 7.8 per cent above its previous day’s price, at one point.
The deal will eventually see the public stake in BoI brought down from its current 36 per cent level to around 15 per cent, through an initial sale of €241m in shares, to be followed by a further €882m divestment. The buyers are a group of around ten institutional investors.
The deal comes a day before a rights issue was due to hand a majority stake to the government in order to fulfil a €5.2bn capital-raising requirement. Ireland’s central bank had mandated the additional capital following its own stress tests in March.
Irish finance minister Michael Noonan said that by the conclusion of a €1.9bn rights issue this evening, private investors will own at least 68 per cent of the bank.
BoI called the deal a “major endorsement of the bank’s strategy and the confidence which these investors share with the bank in the future for the Irish economy”.
Noonan claimed: “This investment is tangible proof of growing international confidence in the future prospects of both Bank of Ireland and the Irish economy.”
The Irish government currently owns majority stakes in Anglo Irish, EBS and Irish Nationwide Building Society, and Irish Life & Permanent will have to accept state control if it cannot find another source of capital soon.