Irish Life & Permanent has begun the second phase of its share buy-back programme to reduce its surplus capital and boost the return to shareholders.

On Wednesday it took advantage of weak stock market conditions to buy 1.9 million of its own shares at €14.90, paying €28.7 million. A week earlier, the group spent €5.9 million buying 384,542 shares at €15.35 each. Together the two lots of shares make up close to 1 per cent of its total share capital.

The group has been taking advantage of the slide in Irish Life & Permanent share price to advance its buy-back programme. Earlier this year, the shares had traded to a high of €17. It will be hampered for a while as it will enter a closed period next week ahead of announcing results in September. Shareholders can expect to see it back in the market in the autumn as long as the share price remains reasonably priced. The bancassurer has been mandated by shareholders to purchase up to 5 per cent of the issued share capital at any one time.

In 2001 it spent €150 million as part of the buy-back programme and is likely to use a further €150 million in 2002, which would be the equivalent to buying the entire 5 per cent. The group is likely to have even more surplus cash on it books by the end of the year, despite the share buy-backs, with the sale of its British-based centralised mortgage lender, Capital Home Loans, expected to be completed over the coming months. It has assets worth more than £1 billion sterling (€1.5 billion) and could yield up to £100 million.