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April 26, 2010    

Bank of Ireland in €3.4bn cash call

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by Kay Murchie
Bank of Ireland in €3.4bn cash call

Bank of Ireland has announced plans to raise €3.4 billion (£2.9 billion) through a rights issue and private placing, in order to meet its capital needs and aid its recovery from the financial crisis.

Last month the bank, which is the Irish Republic’s biggest lender, said there is no let up from the ongoing crisis in the Irish economy.

The economy has been one of the worst performers in the western world this year but has now emerged from what was one of Europe’s worst recessions.

Irish lenders were hit hard by the housing market crash, which saw billions of euros-worth of home loans go bad.

The Bank said it will launch a €1.89 billion rights issue and a €1.54 billion private placing to institutional investors and the state.

The bank, whose UK interests include running the banking products and credit card services of the Post Office, is currently 16% state-owned.

Following the bank‘s announcement, Finance Minister Brian Lenihan said: “Bank of Ireland is the first of our financial institutions to emerge from the banking crisis.”

“Trading conditions in our core markets in Ireland and the UK in the first quarter of our 2010 financial year remain challenging though economic conditions have recently shown some signs of stabilisation after the substantial fall in economic output from early in 2008,” the Bank of Ireland said.

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