By Jonathan Saul
DUBLIN, Nov 22 (Reuters) - Bank of Ireland is in talks with Sandler O'Neill
about a possible capital injection by the U.S. investment bank in a bid to shore
up funds, the Irish Examiner reported on Saturday.
A spokeswoman for the Bank of Ireland, the country's second largest by
market capitalisation, declined to comment on what she said was speculation.
Sandler O'Neill was not immediately available for comment.
Ireland was one of the first countries to respond to the credit crisis
with a guarantee for bank liabilities worth some 440 billion euros ($550.9
billion), but it has not bailed out or nationalised any banks, and they have not
raised equity themselves.
Speculation has continued to grow over Irish government plans for
consolidation in the country's banking sector.
The Irish Examiner, citing unnamed sources, said talks between the two
groups kicked off in Dublin on Friday with Bank of Ireland aiming to stave off
pressure to merge with domestic rivals through Sandler O'Neill taking a large
stake.
Bank of Ireland said on Friday it had received unsolicited approaches
from a number of unnamed parties seeking to invest in the group, but added that
no decision had been made.
The Irish Times said separately on Saturday that two sovereign funds from
the Middle East were interested in taking a stake in the bank and in a possible
merged group comprising Bank of Ireland and Irish Life & Permanent.
The Irish Times said the wealth funds were part of an investment
consortium that included U.S. private equity groups.
Irish banks have been under growing pressure to raise their capital
levels to match European peers. Exposure to a falling property market has hit
investor sentiment and shares in the four listed banks have fallen over 90
percent from highs set last year.
Finance Minister Brian Lenihan said this week he was determined to reform
the banking sector, but would not comment on reports of an impending
recapitalisation plan which could include pushing through bank mergers.
Six Irish institutions signed up for the government's two-year scheme and
Lenihan met with the heads of the groups this week for what the finance ministry
described as "structured" discussions.
Further talks will take place on Friday, a finance ministry spokesman
said.
The Irish Times said on Saturday Ireland's EBS was in talks with Rabobank
over a potential takeover of the Irish building society by the Dutch banking
group.
EBS declined to comment, while Rabobank was not immediately available for
comment on the report.
IL&P said on Friday it had been in discussions with EBS over how the two
might work together in the current market environment.
Irish media has said the government could seek to create two enlarged
banks based around Bank of Ireland and Allied Irish Banks.
A government source told Reuters on Saturday there were discussions about
restructuring and consolidation, but added that talk of creating two enlarged
banks was untrue. (Editing by Peter Blackburn) ($1=.7987 Euro) Keywords:
IRELAND/BANKS
(jonathan.saul@reuters.com; +353 1 500 1504; Reuters Messaging:
jonathan.saul.reuters.com@reuters.net)
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