Bank wants to offer stock after central bank's review
* Says no plan has been approved or agreed by state
DUBLIN Feb 7 (Reuters) - Bank of Ireland (BKIR.I) said on Monday it is discussing with the government how to facilitate a share offering to stockholders after completion of a capital review by Ireland's central bank that is due by March 31.
Such a share offering would, however, cause Bank of Ireland to miss a Feb. 28 deadline to raise 2.2 billion euros of fresh capital, as required by Ireland's EU/IMF bailout package late last year.
The bank is in a race against time to avoid majority state control. Without an injection of capital, Bank of Ireland could find itself roughly 70 percent-owned by government, compared with 36 percent currently.
"None of these structures has been approved by or agreed with the state, and there is no certainty as to which, if any, of the structures under consideration will be adopted," the bank said in a statement.
Investors are steering clear of Irish banks because of uncertainty about how much more capital they will need when the fresh review is completed.
Central Bank Governor Patrick Honohan told Reuters last month that the banks will likely be required to recognize larger loan losses following the inspection. [ID:nSLAPCE7NH]
Despite being the first major lender to meet a previous capital target, raising 3 billion euros partly through private sources last year, Bank of Ireland was forced to dig deeper to meet the tough capital requirements of the EU/IMF bailout package.
It has so far raised 700 million euros in a bond exchange in December and offered last week to exchange 300 million euros of subordinated debt in return for government guaranteed securities at an average discount of around 56 percent to par. [ID:nLDE711273]
However analysts are sceptical it can raise the capital from private sources or extend the deadline to do so. They expect the government, which controls four of Ireland's six main lenders, to plug the gap and assume majority ownership of Bank of Ireland.
"Given that the Feb. 28 deadline is now enshrined in the EU/IMF agreement, one has to assume that any compromise will require approval from both the Irish Central Bank and the EU/IMF," Dublin-based Glas Securities wrote in a note.
"Given the layers of bureaucracy involved here, it is not surprising that the Bank is engaging in expectation management at this juncture." (Reporting by Padraic Halpin; Editing by Steve Orlofsky) |
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