BANK OF Ireland is expected to announce a €3.4 billion capital raising programme today. The programme will include the conversion of Government-owned preference shares into ordinary shares, the purchase of warrants held by the Government, a private placement of shares and a rights issue.

The purchase of the warrants held by the Government is expected to net about €450 million for the State.

At the end of the process, which much be approved by shareholders at an emergency general meeting next month, the State’s holding in the bank will be 35 per cent, which is equivalent to its current notional shareholding when the warrants are taken into account.

The package is also expected to include a private placement of shares worth €500 million and a rights issue that would raise about €1.2 billion. The rest of the €3.4 billion package will be accounted for by the conversion of preference shares to ordinary shares.

The conversion will bolster the capital position of the bank while providing the State with more saleable shares and an opportunity to benefit from future upward movements in the share values.

Bank of Ireland is currently in talks concerning the sale of its subsidiary, Bank of Ireland Asset Management. A sale is expected to net less than €100 million.

The bank needs to raise €2.7 billion to meet new capital requirements set out by the Financial Regulator following the transfer of loans to the National Asset Management Agency.