Bank of Ireland PLC announced Monday it will raise 3.42 billion euros ($4.56 billion), chiefly by issuing new shares, in a plan designed to boost its cash reserves and cap the government's ownership stake at 36.5 percent.
Analysts welcomed the move as evidence that Bank of Ireland will not require any further government bailouts.
But Bank of Ireland shares dipped 4 percent to 1.72 euros ($2.29) as the rights issue, if approved at a shareholder meeting May 19, would mean investors suffer another dilution of the value of their existing shares in the company.
The bank, Ireland's second-largest after Allied Irish Banks PLC, said it would ask existing shareholders to buy up to 1.89 billion euros in new, discounted shares.
The bank also has agreed to private placings with institutional investors worth 500 million euros and with the government worth another 1.04 billion euros.
The institutional investors are to receive 326.8 million new shares for 1.53 euros each, a 15 percent discount off Friday's closing price.
The government's part of the deal would see the state convert much of its current preference-share investment in the bank into 576.8 million ordinary, publicly listed shares costing 1.80 euros each, Friday's closing price. The government already owns 34 percent of Bank of Ireland.
Finance Minister Brian Lenihan said Bank of Ireland's ability to attract new investment from foreign institutions provides "tangible evidence of the growing international and domestic confidence in both Bank of Ireland and our economy."
"Investors in other countries are saying they're prepared to risk their money in this bank. This is a clear sign that international confidence in the banking system is returning," Lenihan said.
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