Minister for Finance Brian Lenihan has praised Bank of Ireland shareholders for their backing of the bank’s latest capital raising plan.
Yesterday, shareholders voted overwhelmingly in favour of a plan to raise €3.56 billion in fresh capital at an extraordinary general meeting of the bank.
The plan, which involves the State via the National Pensions Reserve Fund (NPRF), will lead to a real strengthening of the bank’s capital ratios “and facilitate the bank meeting the credit needs of the Irish economy,” Mr Lenihan said.
Shareholders have approved a fully underwritten rights issue to tap existing investors for €1.72 billion.
The bank is offering retail shareholders €1.1 billion of new stock, while €627 million of new shares will be issued to the Government for converting €3.5 billion in preference shares to ordinary shares.
Bank of Ireland will use €2.94 billion of the capital raised to bolster reserves to cover losses on bad loans moving to Nama and on other loans remaining at the bank.
The Financial Regulator has demanded the bank raise €2.66 billion to meet new capital rules.
“This is the first such equity raising by any of the Irish banks since the start of the financial crisis, and represents an important step in restoring the banking system to health,” Mr Lenihan said.