By Eamon Quinn
DUBLIN--Ireland's plan to sell a large part of a 1 billion euro
($1.3 billion) holding in contingent capital, or CoCo, notes in
Bank of Ireland PLC is a sign that the country's banking system is
on the mend, said the Irish government Wednesday.
The notes are debt securities which can be converted to equity
if the bank's capital falls below a certain ratio or if a "stress
event" occurs.
Dublin plans to sell at least EUR500 million of its EUR1 billion
holding of the notes to private investors. It injected the money
into Bank of Ireland as emergency capital in 2011, at the height of
the country's banking crisis.
"The successful exit from a large portion of this position
represents another step along the road to normalizing 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," Irish Finance Minister Michael Noonan said in a
statement.
Ireland has been forced to pump EUR64 billion--equivalent to
about 40% of its annual economic output--into its banking system to
keep it from collapse over the last five years.
Bank of Ireland, which has made the most progress in returning
to health, was the only Irish lender to avoid outright
nationalization during the country's crisis. The government still
owns a 15% stake in the lender.
The bank said it had hired Davy Stockbrokers, Deutsche Bank and
UBS to help sell at least EUR500 million of the CoCo notes, which
mature in July 2016 and pay an annual coupon of 10%, through a
placing on the secondary market.
Write to Eamon Quinn at eamon.quinn@dowjones.com