BANK OF Ireland has a “good chance” of avoiding State control by offering its junior bondholders an opportunity to convert to equity, according to Harris Associates LP, its largest institutional investor.

Investors would prefer to see junior bondholders swap debt for equity to help the lender reach its capital target than the government increasing its 36 per cent stake to a majority holding, Robert Taylor, director of international research and portfolio manager with Chicago-based Harris Associates, said.

Harris, which owns about 6 per cent of the bank, manages more than $65 billion in assets for clients.

“Right now, even looking at another round of dilution from share issuance, Bank of Ireland is still attractive,” Mr Taylor declared.

“With the flexibility the bank has in converting subordinated debt investors into equity investors, there’s a good chance the bank will avoid majority State ownership.”

Bank of Ireland said on April 14th it would outline its capital-raising plans in the coming weeks. – (Bloomberg)