Ireland's biggest lender priced its fully underwritten 1.73 billion euro rights issue after the close of trading last week at 0.55 euro per share, or 64 percent below its Friday closing price.
The rights issue price represents a discount of 41.7 percent to the theoretical ex-rights price (TERP), Bank of Ireland said, compared with a previously indicated discount range of 38 to 42 percent.
Shares in the bank fell 3.5 percent to 1.481 euros by 0817 GMT, while the wider Irish market fell 0.7 percent and the European banking sector shed 0.2 percent.
The Irish government wants to showcase Bank of Ireland as the first Irish lender to fill its capital shortfall from mostly private sources and which can recover from Ireland's property market crash despite turmoil in the euro zone.
'The wider market concerns around sovereign risk in Europe is hardly a helpful backdrop over the next few weeks,' Goodbody analyst Eamonn Hughes said in a note.
After Bank of Ireland has tested the market, Allied Irish Banks and banking and insurance group Irish Life & Permanent plan to follow suit by raising capital in the second half of the year.
Subject to shareholder approval on Wednesday, Bank of Ireland will issue three shares for every two held and expects gross proceeds of the rights issue at 1.098 billion euros before taking into account the shares taken up by the government, its minority owner.
The Irish government, which has converted part of its preference shares in the bank into ordinary equity, is participating in the rights issue and will hold a stake of up to 36 percent after the operation.
British insurer Prudential on Monday priced its record $21 billion rights issue at a 39 percent discount to the theoretical ex-rights price (TERP)
The overall capital gain in Bank of Ireland's fund-raising plan -- after expenses and buying back state warrants -- is seen at 2.9 billion euros, including the proceeds from an institutional placing and a debt-for-equity swap.
(Reporting by Andras Gergely; Editing by Erica Billingham) Keywords: BANKOFIRELAND/CASH CALL (andras.gergely@reuters.com; +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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