Bank of Ireland to raise €3.4bn

Government's stake in troubled lender to rise to 36 per cent.

Bank of Ireland hopes to raise €3.4bn through a combination of measures, increasing the Irish government's stake in the troubled bank to over a third.

It plans to raise €1.9bn through a rights issue, €500m through an institutional share placing (at a 15per cent discount) and €1.04bn by converting a portion of the government's preference shares into ordinary stock -

The fundraising was welcomed by the Irish finance minister, Brian Lenihan, who said the proposal was: "Good news for our economy, good news for the taxpayer and good news for Bank of Ireland's shareholders and investors."

Patrick Molloy, head of Bank of Ireland, said the announcement marked "a significant turning point for Bank of Ireland and its stockholders."

Bank of Ireland, which was crippled by the property crash, expects to pass €12.2 billion of toxic loans to the Irish Government's newly created "bad bank", the National Asset Management Agency.