PE Consortium Seeks To Buy Bank of Ireland Stake

DUBLIN (Reuters) – Bank of Ireland has received unsolicited bid approaches from unnamed groups, it said on Friday, lifting its shares over 30 percent as speculation grew over government plans for consolidation in the sector.

Separately, Irish Life & Permanent (IPM.I) said it had been in discussions with the EBS building society over how the two “might work together in the current market environment”.

Ireland was one of the first countries to respond to the credit crisis with a guarantee for bank liabilities worth some 440 billion euros ($550.9 billion), but it has not bailed out or nationalised any banks and they have not raised equity themselves.

Banks have been under growing pressure to shore up their capital to match European peers. Exposure to a falling property market has hit investor sentiment and shares in the four listed banks have fallen over 90 percent from highs set last year.

Bank of Ireland said it had received unsolicited approaches from a number of unnamed parties seeking to invest in the group, Ireland’s second-largest bank by market capitalisation.

“No decision on these approaches has been made. Bank of Ireland will keep its stockholders informed as appropriate,” it said.


Shares in Bank of Ireland were last trading 20.8 percent higher at 1.22 euros by 1254 GMT.

“The rumour mill in Dublin has gone into overdrive,” said Davy analyst Scott Rankin. “There are stories of gangs of sharp-suited investment bankers/private equity guys hanging around Dublin hotels.”

Irish Finance Minister Brian Lenihan said on Thursday he was determined to reform the banking sector, but would not comment on reports of an impending recapitalisation plan which could include pushing through bank mergers.

The Irish Times said a consortium of U.S. private investors was interested in taking a large stake in Bank of Ireland and, possibly, a merged group comprising Bank of Ireland and IL&P.

“With over 50 percent of the life market and 40 percent plus of the mortgage market, (an IL&P, BoI merger) would certainly make sense for private equity investors,” said Davy’s Rankin.

Earlier on Friday the Irish Independent, without citing sources, said investment company Cardinal Asset Management had assembled a consortium and planned a 2.5 billion to 3 billion euro bid to buy a stake of up to 60 percent in Bank of Ireland.

The report said the consortium included funds from private equity groups Carlyle and KKR. No one could immediately be reached at any of the groups for comment.

“Events are moving very quickly in the Irish banking sector with consolidation now inevitable,” broker NCB said in a note.

“The Irish government’s objective is to protect and de-risk the banking system, while at the same time it wants to reinvigorate the flow of funds to small and medium sized enterprises and consumers.”

Anglo Irish Bank (ANGL.I) and Allied Irish Banks (ALBK.I) were also among the six institutions that joined the guarantee scheme.

Irish media said the government could seek to create two enlarged banks based around Bank of Ireland and AIB. A government source told Reuters there were discussions about restructuring and consolidation, but added that talk of creating two enlarged banks was inaccurate.

Lenihan has held meetings with the heads of the six institutions which the finance ministry has described as “structured” discussions.

“The minister asked the guaranteed institutions to reflect on a number of matters,” a finance ministry spokesman said on Friday. “Further discussions between the parties will resume in a week.”

By Jonathan Saul and Andras Gergely

(Editing by Simon Jessop)