Bank of Ireland said today the State may end up taking a 69 per cent stake in the lender if private investors shun a rights offer planned for next month.
The Government's stake in the bank would remain at about 36 per cent if the company's rights offer received 100 per cent take-up, it said in a statement this afternoon.
The bank is trying to raise €5.2 billion to meet new regulatory requirements on its capital ratios.
Bank of Ireland is seeking to generate €4.2 billion (excluding expenses) in core Tier 1 capital and €1 billion in contingent capital by a regulatory deadline of July 31st.
The bank is seeking to raise a minimum of €2.12 billion from debt-for-equity offers and burden sharing with subordinated bondholders. This is already in train.
It plans to raise a maximum of €2.23 billion from a State placing, if any, and the rights issue. The State will also provide €1 billion in contingent capital.
Glas Securities, the Dublin-based fixed-income firm, said that Bank of Ireland may raise a total of €2.5 billion from its offer to do a swap with subordinated debt holders for equity or cash.
Bank of Ireland said today it would raise at least €2 billion from the accord, after closing the offer to early acceptances yesterday.
"Based on this result today, we would suggest that it is 1-0 to Bank of Ireland at half time, with those who are seeking to block the bank's" liability management exercise "finding that there is a strengthening wind blowing against them as we await the result of the 'late bird' tenders in early July," Glas said in a note to clients today.