ICC Bank will be able to increase its lending and venture capital investment by up to £150 million following the injection of £10 million of new capital. The state-owned bank is raising £9.85 million after expenses through a rights issue. The major shareholder - the Government - is paying £9,985,666 to take up its full right entitlement. The Government owns 99.9 per cent of the existing shares in ICC and the balance of 711 shares are held by 41 private shareholders. The £10 million capital injection will allow the bank to advance up to £150 million more to clients, according to the chief executive, Mr Michael Quinn. Explaining that new capital is required to back continuing strong growth in business, Mr Quinn said ICC was benefitting from the strength of the Irish economy and the success of the small and medium-sized business sector within that economy.
"We want to be able to continue to grow rapidly and to service our clients needs. We have to have sufficient capital to support that growth," he said.
With strong growth in lending and no new injection of capital by the Government, ICC's capital adequacy ratio - the relationship between its capital and its risk assets (loans and venture capital investments) - was 10.8 per cent last April. Continuing strong growth in lending will have further reduced the ratio, bringing it close to the minimum level required by the Central Bank and reducing the scope for further growth in the business. Broadly, the £10 million increase in Tier 1, or equity, capital would allow the bank to advance about £100 million more in loans. In addition, the extra equity will allow ICC to use some of its subordinated capital - Tier 2 capital - to back additional lending. This should support up to £50 million of new lending. At the end of April ICC had total loans of £995 million.
The full £10 million raised will go into the balance sheet as capital while the costs of up to £150,000 will be met out of normal business expenses. Shareholders have been offered five new shares for every six held at close of business on October 17th. ICC is currently finalising a paper on its future strategic options for the Minister for Finance. While Mr Quinn declined to discuss the paper, the bank is known to be interested in finding a strategic partner who will facilitate its growth and development as a bank for small and medium-sized business. When ICC was set up in 1933, the government offered shares in the bank to the public and underwrote the issue. The government was left with a majority stake. In the 1950s it tried to mop up the shares not in State ownership. The majority of the private shareholders accepted the Government offer but the 41 remaining shareholders retained their stakes.
