Bank of Ireland’s share price surged today after it confirmed it has received "unsolicited approaches" from parties wishing to make an investment in the group.
In a statement, Bank of Ireland said it has received "unsolicited approaches from a number of parties wishing to make an investment in the group. No decision on these approaches has been made. Bank of Ireland will keep its stockholders informed as appropriate."
Bank of Ireland shares closed up 24 per cent at €1.25. Earlier this week Bank of Ireland stock dipped below the €1 mark.
Amid speculation of imminent structural reform of the Irish banks AIB’s share price was unchanged at €2.15, Irish Life and Permanent closed down 4.3 per cent at €1.10, while Anglo Irish Bank slid half a percentage point closing at 91 cent.
The speculation follows discussions between Minister for Finance Brian Lenihan and the six guaranteed banks and building societies at Farmleigh yesterday on how to inject fresh cash into the banks.
A series of consolidations in the banking sector at the same time as an injection of cash from a consortium of private investment funds and possibly the State, has emerged as one of the central themes of yesterday's discussions.
A Department of Finance spokesman said this morning "structured discussions occurred between the Minister for Finance and the chairmen and chief executive officers of the six guaranteed institutions". The discussions are due to resume next week.
He said the Minister asked the guaranteed institutions to “reflect on a number of matters”.
Any mergers are likely to result in the emergence of two enlarged banks built around the biggest players in the market, AIB and Bank of Ireland.
Were Bank of Ireland and Irish Life and Permanent (ILP) to be merged it would radically change the Irish banking market.
This entity would control more than 50 per cent of the Irish life insurance market and 40 per cent of the mortgage market. Bank of Ireland employs 16,000, while ILP has a staff of 5,000. ILP shares were 3 per cent lower this morning at €1.11. AIB shares were almost 2 per cent up at €2.19 while Anglo Irish Bank shares were flat this morning.
Smaller institutions including ILP, Anglo Irish Bank, EBS are expected to resist mergers with larger banks.
The union representing staff in the financial sector has called on the Government to end the uncertainty surrounding the Irish banking sector.
In a statement this morning the IBOA said the speculation was “disconcerting” for staff, customers and shareholders.
“The information deficit that has now been created will do nothing to bring stability to the Irish Banking industry,” IBOA general secretary, Larry Broderick said.
He also called on the banks to reassure staff that there will be no attempt to force through compulsory redundancies.
Siptu president Jack O’Connor welcomed moves to address the banking crisis but warned that banks must “not left to the mercy of asset strippers and hedge funds”.
Mr O’Connor said suggestions in the media that there is a financial stimulus package in preparation was “an indication of an emphasis on medium to longer term strategic thinking that has been sadly absent over the last ten years of reliance on unfettered free market madness”.
“However the suggestion that private equity capital would be relied upon to recapitalise the Irish banks is deeply concerning, especially given the lessons of eircom,” he said.
The Government is understood to believe that, ultimately, it does have the authority to compel mergers among the banks within the guarantee scheme but is very reluctant to use this power, preferring to secure agreement by consensus if possible.
