UNDERWRITING institutions managing the Bank of Ireland sale of new shares offloaded the 169 million units not taken up by existing shareholders in the rights issue.

The bank confirmed that existing shareholders had purchased about 95 per cent of the new stock on offer, raising €1.7 billion. The five institutions which guaranteed the rights issue sold the 5 per cent rump not taken up at a price of 75 cent a unit.

The Government has taken a 36 per cent stake after participating in the rights issue, buying €630 million of new stock after converting €1 billion of the State’s €3.5 billion preference share investment to ordinary stock in an earlier private placing.

This implies a 91.5 per cent take-up among shareholders. The rights issue – part of a €3.56 billion capital-raising programme – leaves the bank “in a strong position to compete in the Irish banking market”, said Bloxham Stockbrokers analysts, and makes it the first bank to pass the Financial Regulator’s capital targets.

The new shares are expected to start trading next Monday.

The bank has boosted its capital base by €300 million more than the level set by the regulator at the end of March. Following the share offer, between 20 and 25 per cent of the shareholders are retail investors – roughly the pre-crisis level – while institutions will hold 40-45 per cent.

Analysts said that while the Bank of Ireland’s right issue was a success, similar capital-raising plans by Allied Irish Banks and Irish Life Permanent later in the year would be affected by the continuing crisis in the debt markets.

AIB must tap shareholders for capital after raising an estimated €4.4 billion from the sale of its businesses in Poland, the US and the UK to meet the €7.4 billion capital target set by the regulator.

IL&P – which, unlike the other banks, is not participating in the National Asset Management Agency – must raise €900 million in additional capital to absorb higher loan losses and meet the regulator’s new capital targets.