Investors snap up stake in Bank of Ireland

IRELAND sold a €1.1 billion (£983 million) stake in Bank of Ireland to a group of unidentified investors yesterday to keep the country's largest bank out of state hands and provide a rare boost to a battered sector and bruised economy.

The government had been widely expected to take control of Bank of Ireland, the last domestic lender outside of state ownership, after it agreed to underwrite a rights issue, the results of which are due tomorrow.

However - after the sale and rights issue - the government will now own a maximum of 32 per cent in the bank while new investors will hold between 14 and 37 per cent, the finance ministry said.

Finance minister Michael Noonan said: "It has been recited far and wide that it is impossible for Ireland to get money on the markets.

"Now we have significant private sector investors prepared to put money into Bank of Ireland and that's a strong signal internationally."

Meanwhile, Allied Irish Banks yesterday unveiled a €2.6bn underlying first-half loss as more loans turned bad.