BANK of Ireland will raise from private sources much of the €2.7bn (£2.4bn) it needs, potentially becoming the only member of Ireland’s “bad bank” scheme to escape a fresh bailout.
The bank said it was in fundraising talks with investment banks, a welcome relief for the Irish government, which faces years of scrimping to plug a black hole created by the financial sector.
Shares in Bank of Ireland jumped more than 20 per cent after the bank said its loan losses had peaked and it was in talks to raise capital to compensate for losses on property loan sales to the bad bank, the National Asset Management Agency (NAMA).
Ireland’s biggest bank by market value will privately raise about half of the capital it requires to provide a buffer against future losses. The state will convert some of its €3.5bn of preference shares into ordinary equity but should not have to underwrite the rights issue.
Bank of Ireland is selling the first tranche of its loans to NAMA at a discount of 35 per cent and said the discount on the whole €12bn portfolio will be in line with its previous guidance which pointed to a lower discount.
It also reported an underlying loss of €1.47bn for the nine months to the end of December, having shifted the end of its fiscal year to match the calendar year.
“It’s not a proud boast to say you’re least worst... Relative to performance that kind of an issue is not something we take a lot of comfort out of,” said Richie Boucher, Bank of Ireland chief.
Referring to the scale of property losses other banks were exposed to, he added: “I think the level of debt and exposures is pretty big, it’s pretty frightening.”
City A.M. Reporter