The Bank of Ireland has performed a Houdini-like escape in avoiding full nationalisation, after attracting a group of foreign investors to take a stake just as the state was about to swoop.
The group of Canadian and American fund managers who are making the move have just been named. They will take a 34.9% in the bank, reducing the state's equity from 36% to 15.1%.
The investors are:
• Fairfax Financial Holdings
• New York buyout firm WL Ross and Co, which is led by billionaire investor Wilbur Ross, known as the "king of bankruptcy"
• Boston-based Fidelity Investments
• Los Angeles-based Capital Group
• Californian property firm Kennedy Wilson.
Three of these – Fairfax, WL Ross and Fidelity – will hold the largest stakes, each taking less than 9.9% of the shareholding in the bank. They are each stumping up about €300m of the €1.12bn investment.
The Bank of Ireland described the investors in a statement as "long-term value investors", who have "recognised how the Bank has faced up to and focused on dealing with its challenges".
Bank of Ireland boss Richie Boucher, who had faced calls to resign, will doubtless be walking around with a spring in his step.
The bank is the only one of six domestic banks to escape nationalisation after the worst financial crash in the state's history.
House prices falling in Ireland
One thing the Bank of Ireland will be expected to do pretty promptly is to turn the money taps on again and start getting credit flowing again to SMEs, many of which have gone to the wall because of the disappearance or curtailment of overdraft facilities.
(I know of one small business man whose overdraft facilities were pulled two years ago and who gets a call around 9.30am every day from his bank to ask how much he is lodging that day.)
The lack of credit in the market has also been blamed for the continued decline in house prices.
Prices in Dublin are now 49% lower than market peak in February 2007, with apartments down 54%, according to the latest figures from the Central Statistics Office.
Although the CSO figures aren't the worst, they indicate that the pace of decline is accelerating. House prices in Dublin fell 2.4% last month, reversing a gain in May.
The fall in June was the fastest in more than two years.
gruss weltumradler