DUBLIN, Dec 8 (Reuters) - Bank of Ireland offered to exchange subordinated debt for government guaranteed securities on Wednesday in a move that could plug around 400 million euros ($529.8 million) of its 2.2 billion euro capital hole.
Ireland's central bank wants lenders to 'overcapitalise' as a result of the 85 billion euros emergency loan package agreed with the IMF and EU last month, raising its target for core Tier 1 capital ratio to 12 percent from 8 percent.
Bank of Ireland was the first major Irish bank to meet the previous capital target, raising 3 billion euros partly through private sources earlier this year in an exercise which left the state with a 36 percent stake plus preference shares.
The bank -- which is now expected to fall under majority state ownership -- began a fresh round of capital raising by making an exchange offer for up to 1.5 billion euros of Lower Tier 2 securities with a nominal value of around 3.1 billion.
Ireland's biggest bank by market value said it would offer new 13-month government guaranteed senior securities reflecting 'current market pricing expectations' in return and said it expected the transaction to be equity accretive.
With full participation unlikely, a more probable 50 to 60 percent uptake would generate a capital gain of between 350 million euros and 450 million, Dublin-based Glas Securities said in a note.
'It will come as some relief to investors that a coercive, more penal approach has not been adopted, at least for Lower Tier 2,' Glas said.
Bondholders in Bank of Ireland and Allied Irish Banks are trying to cap any losses they could face from a government plan to make them shoulder some of the cost of overhauling the country's banks.
The government signaled last month that the sort of restructuring of subordinated bank debt already being implemented by nationalised lender Anglo Irish Bank could be replicated across the sector.
(Reporting by Padraic Halpin and Carmel Crimmins; Editing by David Holmes)
($1=.7550 Euro) Keywords: BANKOFIRELAND/ (padraic.halpin@reuters.com; Reuters Messaging: padraic.halpin.reuters.com@reuters.net; +353 1 500 1504) 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.
Ireland's central bank wants lenders to 'overcapitalise' as a result of the 85 billion euros emergency loan package agreed with the IMF and EU last month, raising its target for core Tier 1 capital ratio to 12 percent from 8 percent.
Bank of Ireland was the first major Irish bank to meet the previous capital target, raising 3 billion euros partly through private sources earlier this year in an exercise which left the state with a 36 percent stake plus preference shares.
The bank -- which is now expected to fall under majority state ownership -- began a fresh round of capital raising by making an exchange offer for up to 1.5 billion euros of Lower Tier 2 securities with a nominal value of around 3.1 billion.
Ireland's biggest bank by market value said it would offer new 13-month government guaranteed senior securities reflecting 'current market pricing expectations' in return and said it expected the transaction to be equity accretive.
With full participation unlikely, a more probable 50 to 60 percent uptake would generate a capital gain of between 350 million euros and 450 million, Dublin-based Glas Securities said in a note.
'It will come as some relief to investors that a coercive, more penal approach has not been adopted, at least for Lower Tier 2,' Glas said.
Bondholders in Bank of Ireland and Allied Irish Banks are trying to cap any losses they could face from a government plan to make them shoulder some of the cost of overhauling the country's banks.
The government signaled last month that the sort of restructuring of subordinated bank debt already being implemented by nationalised lender Anglo Irish Bank could be replicated across the sector.
(Reporting by Padraic Halpin and Carmel Crimmins; Editing by David Holmes)
($1=.7550 Euro) Keywords: BANKOFIRELAND/ (padraic.halpin@reuters.com; Reuters Messaging: padraic.halpin.reuters.com@reuters.net; +353 1 500 1504) 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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