Written Answers - Banks Recapitalisation

Wednesday, 18 April 2012

Dáil Éireann Debate
Vol. 761 No. 3

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  196.  Deputy Éamon Ó Cuív  Information on Éamon Ó Cuív  Zoom on Éamon Ó Cuív   asked the Minister for Finance  Information on Michael Noonan  Zoom on Michael Noonan   the total investment to date by the State in Bank of Ireland; the number, type and the cost of the shares bought in Bank of Ireland; and if he will make a statement on the matter. [19029/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  The total investments by the State in Bank of Ireland (the “Bank”) on my direction, taking into account (i) the partial conversion of preference shares to ordinary shares in April 2010 and (ii) the sale of ordinary stock to a group of private investors in 2011, are set out in the table below:

Instrument Units (million) Total Consideration (EUR million)
Ordinary Shares 4.328 1.924
Preference Shares 1.837 1,837
Contingent Capital Notes 1,000
Sub Total 4.761
Fee Income 0.608
Net Amount 4,153

The preference shares carry an annual contractual coupon of 10.25% and the Contingent Capital Notes carry and annual contractual coupon of 10%. This is higher than the current cost of new borrowing for the State and secondary market yields on Irish sovereign debt.

  197.  Deputy Éamon Ó Cuív  Information on Éamon Ó Cuív  Zoom on Éamon Ó Cuív   asked the Minister for Finance  Information on Michael Noonan  Zoom on Michael Noonan   if he will provide details of the sale of State shares in the Bank of Ireland including the number, type and sale price of these shares; and if he will make a statement on the matter. [19030/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  As a result of the 2011 Prudential Capital Assessment Review (“PCAR 2011”), Bank of Ireland (the “Bank”) was required to raise €4.2 billion regulatory core tier 1 capital. The Bank took various steps to raise this required capital including a rights issue.

I directed the National Pension Reserve Fund (the “NPRF”) Commission to participate in the Bank’s rights issue. A group of third party investors committed to purchase a significant portion of the State's participation in the Bank’s rights issue. A breakdown of the purchase and sale of ordinary stock arising from the PCAR 2011 rights issue is provided below:

Purchase / Sale Number of Units
(million)
Unit Price
(EUR)
Consideration
(EUR million)
Purchase 13.12 0.10 1.312
Sale 10.51 0.10 1.051
Net Amount 6.61 0.10 0.261

Net of fees the total consideration paid by the State for ordinary shock as a result of the PCAR 2011 rights issue was €211 million. The purchase and sale of the Bank’s ordinary stock occurred at the same unit price of 10 cents, resulting in no gain or loss for the State as a result of the transaction.


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