Bank of Ireland is planning to buy back up to €230 million worth of preference shares which are mainly held by Irish and British institutional investors.

The bank has launched a tender offer through Cazenove and Davy to buy back up to 9.3 million of the preference shares at a maximum price of £17.75 sterling and €22.50. Davy has estimated that assuming the sterling and euro preference shares are repurchased in equal proportions then it will cost Bank of Ireland a maximum of €230 million.

Last March, Bank of Ireland raised €600 million in preferred stock which carried an interest rate of 7.4 per cent. The preference sterling and euro shares being repurchased in the tender offer carry a double-digit interest rate so Bank of Ireland will make sizeable interest savings. Davy has estimated that the refinancing will be marginally earnings enhancing.