Bank of Ireland has announced more details of its plans to raise capital to meet targets set by the Central Bank.
Earlier this week, the bank said it was planning to impose losses on its subordinated, or junior bondholders. Today it announced details of these proposals, and also plans to raise money by offering new shares.
As it signalled earlier this week, the bank will offer to buy back debt held by two types of junior bondholders, for 10% or 20% of the original value of the bonds, with no payment of interest.
But bondholders can also opt to swap their debt for shares in the bank. If they take up this option, they will receive 20% or 40% of the original value of the bonds.
Bank of Ireland said the terms of the exercise reflect the Finance Minister's objective of ensuring that subordinated debt holders contribute a significant element of its capital requirement of €4.2 billion.
It also plans to seek approval to buy back any bonds not taken up under the offer at a much lower price of one cent for every €1,000.
The bank also said it planned a rights issue, which will be underwritten by the State, at a price of 10 cent. The exact size will be announced after the results of the bond offers are known. Bank of Ireland said the maximum to be raised if all bondholders opted to take shares in the bank would be €1.76 billion. If all bondholders opted for cash, the maximum size of the rights issue would be €2.22 billion.
Bank of Ireland also said it continued to hold talks with other sources of private capital on the terms and form in which they may be able to participate in the bank's proposals.
Bank of Ireland has to raise €4.2 billion to meet its targets, as well as an extra €1 billion of contingent capital, which will be placed with the State.
Shares in the bank ended down 13.3% at 14 cent in Dublin this evening.
