First Active shareholders are being asked to approve a restructuring of the bank's capital base that would allow them to receive a one-off cash payment in June.

The former building society is offering shareholders €1.12 per ordinary share that could result in payments of around €550 for individuals who held onto the free shares issued when First Active floated in 1998.

Customers of the former First National building society with qualifying mortgage and savings accounts were entitled to 450 free shares for each of these accounts under the terms of the flotation. Additional shares were also issued as a loyalty bonus over the next two years that would leave many individuals holding 495 shares. That block of shares would entitle investors to a payment of €554.40. Where customers held two qualifying amounts they would receive €1,108.80.

The proposal will be put to shareholders at the next annual general meeting scheduled for March 27th.

If this is approved, the bank will then make an application to the High Court to be allowed to restructure its capital base. This hearing could happen in April or May and if successful, could result in cash payments being made to shareholders on June 13th.

First Active will also pay the final dividend of 15.5 cent per share on that date.

According to First Active, some 95 per cent of its shareholders hold fewer than 1,000 shares. In structuring this deal, it has tried to ensure that most of these shareholders will not end up having to pay capital gains tax on this windfall. Where a shareholder has 990 shares or less and does not have any other capital gains in the year, the payment will fall within the annual personal capital gains exemption of €1,270 and no capital gains tax will be due.

Anyone who buys First Active shares before the redistribution is approved in March would also be entitled to the return of capital attached to them.

The bank is recommending that the cash will be distributed by the issuing of two new bonus shares for each ordinary share held by shareholders on the register at the close of business on March 25th, 2003.

The payment will then be made on those bonus shares which will subsequently be cancelled. The amount of capital to be repaid will be 56 cents per bonus share which is equal to €1.12 for every existing ordinary share.

The €160 million includes some of the funds realised by First Active through the sale of its interest in Britannic Money. Strong growth in profits at the bank over the past couple of years has also increased its reserves.