Shares in Bank of Ireland tumbled today as it announced plans for a rights issue underwritten by the Government.

The stock lost 13.3 per cent by 3.15pm today as the bank said it would try to raise between €1.76 billion and €2.2 billion, trading at 14.3 cent on the Dublin market.

Earlier, shares had fallen below 13 cent.

The bank today said the rights issue would be priced at about 10 cent per share.

The amount raised will depend on the outcome of a €2.6 billion debt exchange with subordinated bondholders, the bank said in a statement.

Bank of Ireland is offering Tier 1 debt holders 10 per cent of the nominal amount of their investment in cash or the equivalent of 20 per cent in equity. It's also offering 20 per cent in cash to Tier 2 debt holders, or 40 per cent in equity.

The bank said it will place with the state a €1 billion, five-year contingent capital instrument with an 8.25 per cent core Tier 1 trigger, and that it's continuing talks with others sources of private capital.

Additional reporting: Bloomberg