The bank, in which the state has a 36 percent stake, said on Thursday it raised nearly 2 billion euros in capital from the deeply discounted offer in which the vast majority of junior debt holders opted, as expected, for equity over cash .
As well as hitting its junior debt holders, the bank is launching a government-underwritten rights issue and a potential state stock placing in its bid to find the capital demanded of it after stress tests in March.
The state is expected to end up with a majority stake in the lender after the rights issue is completed in late July, meaning that the government will have effectively nationalised the sector.
Bank of Ireland is talking to private investors about them taking a stake in the group and has agreed to a potential government stock placing of up to 15 percent to facilitate such talks.
However analysts expect a muted response to the rights issue and even if the bank manages to place the ringfenced shares privately, it will still struggle to avoid majority state-ownership.
BOI had offered to buy back about 2.6 billion euros of Tier 1 and Tier 2 subordinated debt. Bondholders who took up the offer received between 10 percent and 20 percent of the nominal value of their securities in cash or an equity alternative worth between 20 percent and 40 percent of face value.
The bank said 95 percent of eligible bondholders opted for equity at a conversion price of 11 euro cents.
(Reporting by Padraic Halpin; Editing by David Holmes)
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