New Bank of Ireland debt offer

BANK of Ireland offered to exchange subordinated debt for government guaranteed securities yesterday in a move that could plug around €400m (£335.7m of its €2.2bn capital hole.

Ireland’s central bank wants lenders to “overcapitalise” as a result of the €85bn emergency loan package agreed with the IMF and EU last month, raising its target for core Tier 1 capital ratio to 12 per cent from eight per cent.

Bank of Ireland, Ireland’s biggest bank by market value, was the first major Irish bank to meet the previous capital target, raising €3bn partly through private sources earlier this year in an exercise which left the state with a 36 per cent stake plus preference shares.

The bank – which is now expected to fall under majority state ownership – began a fresh round of capital raising by making an exchange offer for up to €1.5bn of Lower Tier 2 securities with a nominal value of around €3.1bn.