Bank of Ireland was founded in 1783 and the premises at College Green, Dublin, of the Irish Parliament, which became defunct on the Act of Union coming in to effect in 1801, were purchased for £40,000 in 1803.

The Bank of Ireland today confirmed that it has commenced discussions with a number of potential institutional investors with a view to assessing interest in a capital raise. 

In a statement, BoI said that it would expect to be in a position to make a further announcement in relation to its capital plans when clarity regarding the outcome of discussions with the EU regarding the bank's Restructuring Plan had been reached.  Last week it announced details of its progress in negotiations with the European Commission (EC) in relation to its Restructuring Plan. BoI said any transaction with investors may be effected through a combination of a rights issue, a firm placing to institutional investors, a conversion of part of the State's 2009 preference stock into ordinary equity on market terms and selective liability management.  Based on the current envisaged structure, the bank expects that the State would continue to be a minority shareholder.

Goodbody analyst, Eamonn, Hughes, commented: "The make up of a capital raise will be through a combination of a rights issue, a firm placing to institutional investors, a conversion of some of the government preference shares and selective liability management. The specific mention of a firm placing confirms the recent speculation although the mention of 'institutional investors' would suggest that there may be no government involvement in this element of the capital raise. The use of the term “selective liability management” may suggest that the company would consider excluding the US hybrid exchange in an attempt to conclude the full capital raise sooner.

Presently, our models show a €500m placing and €1.7bn rights issue (which, combined, equates to the €2.2bn market cap of the bank, which has risen strongly this week). We have circa €400m of gains coming from the hybrid exchange and see the government convert €560m of its €3.5bn of preference shares. This analysis would see the government with a 21% stake, the placing recipients at 9% and the hybrid exchange investors with 12% of the enlarged bank. We assume the government 'follows its money' in the rights offering, so ends up putting c€800-850m into the bank (€560m through the preference shares and c€270m in the rights issue). Our estimates show BOI trading at 0.93x our end 2010 prospective NAV (TERP adjusted, using a 40% rights discount). With UK peers on c1.0-1.1x, we think BOI is already looking like it is getting up with events."

Pension Top-up

Last night, chief executive Richie Boucher issued a statement which said in relation to the controversy about a €1.5m top-up in his pension, that would allow him retire on a full pension at 55: "Although I have been out of the country for this week engaged in intensive work in relation to [investment] priorities, I have kept abreast of and I am sensitive to the current comment and debate about my pension arrangements.

My absolute priority and that of all my colleagues in Bank of Ireland is to complete the task we have set ourselves to restore the strength of the business and support economic recovery.

In this regard I am determined that none of us in Bank of Ireland should be distracted from this critically important task.

Therefore, I have decided to waive my option to retire on pension at age 55."

Earlier on Wednesday, the chief executive of the Labour Relations Commission, Kieran Mulvey, said such awards were creating a negative climate in industrial relations and would make it harder to get the Croke Park pay deal for the public service to be accepted by union members. He claimed high payments to top executives in banks were taking place against a background where people were being asked to take severe severe cuts in wages, pensions and employment. Mulvey asked what the public interest directors appointed to the boards of banks were doing about such payments, and why they had not been called before an Oireachtas Committee to account for these matters?

The Taoiseach Brian Cowen said on Wednesday that it would be "helpful in public perception terms" if Boucher refused to accept his controversial pension top-up but Cowen said there was nothing the Government could do legally to force this to happen. He added that he hoped people voting on the Croke Park public sector pay deal would look at what he called the "big picture."