Stricken Bank of Ireland announces capital raising

The Bank of Ireland announced a €3.4bn (£3bn) capital raising last week to shore up its balance sheet, as the Irish Government prepares to increase its stake in the bank.

The bank will try to raise this sum through a combination of a rights issue, a placing and a debt for equity swap. It is also planning to restructure and sell off some parts of its business. The Irish state will hold 36.5% of the bank, up from 34%, as well as €1.78bn of preference shares. Ireland’s financial sector has been hit hard by the economic downturn, with the state having to bail out the country’s major banks. The Bank of Ireland’s governor Patrick Molloy insists the bank’s capital position remains robust, but it needs a larger capital buffer because market expectations of ...