Irish banking cash calls off to good start

BANK of Ireland yesterday sent a welcome positive signal to fellow troubled Irish lenders by securing a strong 94.6 per cent take-up for its €1.7bn (£1.4bn) cash call.

The success of the bank’s 3-for-2 rights issue, which was at a price of €0.55 per new share, a 41.7 per cent discount to the theoretical ex-rights price, paves the way for similar actions later this year from Allied Irish Bank and Bancassurer Irish Life & Permanent. Bank of Ireland is led by chairman Pat Molloy.

The Irish government, which holds a 36 per cent stake in Bank of Ireland, took up its full €600m quota of rights.

The proceeds of the rights issue form a large part of Bank of Ireland’s €3.4bn recapitalisation drive, which also included an institutional placing, a debt for equity swap and the conversion of some state preference shares into ordinary equity. The bank has now comfortably exceeded the seven per cent equity tier one capital ratio target set for it by the government, with a ratio of eight per cent.

The move means that Bank of Ireland has escaped majority state ownership – a feat unlikely to be repeated by Allied Irish, which needs to plug a much larger capital shortfall of €7.4bn. Bank of Ireland will use some of the proceeds to pay back warrants from the Irish government.

The rights issue was fully underwritten by Citigroup, Credit Suisse, J&E Davy, Deutsche Bank and UBS, which placed the rump later on in the day yesterday at €0.75 per share.


ADVISING Bank of Ireland on its rights issue were a pairing of Irish boutique IBI Corporate Finance, the bank’s retained financial adviser, and the big-hitters at Credit Suisse in London.

Leading the team for Credit Suisse in London was one of its top bankers Chris Williams, the firm’s vice president of investment banking for the EMEA region. Williams has certainly been busy lately, having been one of just four senior Credit Suisse emissaries sent to advise Prudential on its aborted bid for AIA. He originally joined the bank last year from rival Citigroup, where he co-headed the financial institutions group.

He was joined by colleagues Robert Mayhew and Edward Griffin, both directors in investment banking.

Over at IBI, which employs just 25 people in comparison to Credit Suisse’s 48,000-odd global staff, joint managing director Tom Godfrey led the advisory team. Godfrey has been advising Bank of Ireland for the past two years, including on its €3.5bn recapitalisation.