IRISH FUND managers are campaigning in the international markets to drum up support for their plan to recapitalise the domestic banking system as co-investors with the State.
As the chiefs of the six State-guaranteed banks and building societies prepared to discuss recapitalisation at meetings today with Minister for Finance Brian Lenihan, banking shares rose sharply on foot of the initiative co-ordinated by the Irish Association of Investment Managers (IAIM).
AIB gained 15 per cent to €2.77. Irish Life Permanent rose 20 per cent to €1.63 and Bank of Ireland rose 9.4 per cent to €1.51. Anglo Irish Bank rose 5.68 per cent to 93 cent.
Late last night it emerged that Aviva Investors, FC Ireland and Setanta Asset Management had given tentative support to the IAIM plan, which follows expressions of interest from AIB Investment Managers, Irish Life Investment Managers and Bank of Ireland Asset Management.
It is understood that Pioneer Investment Management, the largest fund operator in the Irish market, has yet to be approached.
There was no comment yesterday from Pioneer, whose stance of the proposal is unknown.
The IAIM move was welcomed yesterday by Mr Lenihan, who described it as a "a sign that people are willing to invest in this country". He declined, however, to say whether the Government was prepared to co-invest in the plan.
The Government is examining other investment proposals, mainly from the private equity sector. Mr Lenihan, Central Bank governor John Hurley and senior Department of Finance officials will discuss these proposals in meetings with the chief executives and chairmen of AIB, Bank of Ireland, Irish Life Permanent, Anglo Irish Bank, the Educational Building Society and the Irish Nationwide Building Society.
Although the IAIM has made it clear that financial support from the Government or a Government body was a prerequisite for its plan, sources close to the proposal said the body was not necessarily seeking a 50-50 investment with the State. The appointment of a corporate finance adviser to the IAIM and its participating members is imminent and could come as early as today, it is understood.
The organisation wants to develop a "unified fund" with a government body such as the National Treasury Management Agency or the National Pension Reserve Fund. While participating companies would decide together on the scale of the fund's initial investments in individual banks, the IAIM is open to the possibility that the day-to-day management of the fund would be carried out by a State body.
Although there are indications that participating funds are willing to pool more than €2 billion into the recapitalisation effort, no firm decision has been taken as to the exact amount of money they are targeting. The companies would invest only client funds in the recapitalisation initiative.
"None of the people involved would be managing funds on their own account," said a senior source with knowledge of the proposal.
The plan is seen as an effort by existing long-term investors in the Irish banks to avoid any serious dilution of their interest the institutions were recapitalised from other sources. The aim of the IAIM and its participating members is to pre-empt alternative recapitalisation proposals backed by private equity groups.
