Bank of Ireland successfully raised €580 million of equity today as part of a deal to repay €1.8 billion of its State bailout.

Under its original €4.8 billion bailout back in 2009, Bank of Ireland had been entitled to purchase the 1.8 million preference shares back from the Government at €1 each before March 31st, 2014.

After that date, the price would have risen to €1.25 a share, which would increase the total cost to the bank to €2.25 billion.

Today’s issuance will redeem €537 million of the Government’s shares.

The remainder of the Government’s €1.8 billion holding will be redeemed through the issuance of debt to private investors secured on the preference shares.

In a statement, the bank said a total of 2.2 million of ordinary shares were place on the market at a price of €0.26, generating €580 million.

The placing represented approximately 7.4 per cent of the bank’s ordinary stock prior to the placing.

Minister for Finance Michael Noonan said earlier that the deal would generate a profit for the taxpayer on the shares, with the exact return depending on the outcome of the book-building exercises for both transactions.

The fundraising will bring to €4.1 billion the amount generated by the State from the financial sector over the past two years, including the €1.3 billion sale of Irish Life and the €1 billion redemption by Bank of Ireland of contingent convertible capital notes.

The preference shares have proved to be a good earner for the Government. Bank of Ireland paid a cash dividend on the shares of €188.3 million in each of the past two years and €214.5 million in 2011.

Bank of Ireland mandated Credit Suisse, Davy, Deutsche Bank and UBS as placing agents, with Bank of America Merrill Lynch joining the four as joint lead managers and underwriters for the debt sale to private investors.