ALLIED Irish Banks (AIB) has raised €1bn (£848m) of capital by exchanging bonds worth €2.4bn for a new issue of €1.3bn, the lender said yesterday.
“The securities will be exchanged for between 50 per cent and 67 per cent of their face value in line with the previously announced exchange prices,” AIB said in a statement, adding that it expected equity accretion of €1bn.
The bank had previously warned that it needed to raise an additional €1.5bn in capital on top of a €3.5bn injection of state aid, due to its exposure to toxic property loans.
The mooted sale of its stake in US bank M&T Bank Corp would net the bank an estimated €300m, leaving AIB just €200m short of its target, said Ciaran Callaghan, analyst at NCB Stockbrokers.
AIB will also participate in Ireland’s National Asset Management Agency (Nama), a “bad bank” set up as a dumping ground for around €90bn of risky loans held by Irish banks.
AIB might have to write down €6bn on an estimated €30bn of assets that it will hand over to Nama at a discount, said Scott Rankin, analyst at brokerage Davy.
Such a writedown would knock the bank’s core equity ratio so low that even after disposing of assets, it could fall below the level required by regulators, Rankin said.