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News : Irish Last Updated: Jan 10, 2013 - 2:05 AM


Irish Government raises €1bn from full-sale of its holding of Bank of Ireland notes
By Finfacts Team
Jan 9, 2013 - 4:02 PM

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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.

Update: The Government has sold €1bn worth of Bank of Ireland loan notes to private investors.

The sale generated bids totalling €4.8bn and the notes were sold at a small premium, netting the State a profit of €10m.

In a statement, Michael Noonan, finance minister, said the move represents a vote of confidence by international investors in Ireland's recovery and the Government's banking policies.

The minister had earlier welcomed the successful conclusion of negotiations which saw the Irish Government dispose of all of its €1bn holding of Contingent Capital Notes (CCN’s) in Bank of Ireland.

The minister said: “I am delighted to announce this latest transaction which represents another vote of confidence by international investors in Ireland’s recovery and the government’s banking policies in particular. Since making this €1bn investment in Bank of Ireland in July 2011 the Irish taxpayer has received a generous return of 10% per annum on its money.”

This transaction follows an initial approach by investment banks to the Department late last year which indicated that there was sizeable investor interest in the State’s CCN or 'Coco' instruments and particularly the holding in Bank of Ireland. These Contingent Capital instruments are debt securities which convert into equity in the bank on the occurrence of certain stress events or if the bank’s capital falls below a set ratio.

The State’s investment in these instruments dates back to the 2011 PCAR exercise (stress tests), and the Department of Finance says the successful exit from a large portion of this position represents another step along the road to normalising the State’s relationship with the banking sector and reflects positively on the progress being made in returning our banks to a position of strength.

Davy, Deutsche Bank and UBS managed the sale

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