Tue Jan 18, 2011 4:01pm EST
* Final bids were submitted on Monday
* EBS needs to raise 438 million euros by end of Feb
* EBS looking at liability management exercises -source (Adds
background, no comment from EBS and Irish Life)
DUBLIN, Jan 18 (Reuters) - The private equity consortium
bidding for EBS [EBSBS.UL] has upped the amount of cash it is
willing to invest into the Irish building society to more than
600 million euros ($803.2 million), a source familiar with the
process said on Tuesday.
Dublin-based Cardinal Asset Management was initially
looking at injecting between 450 million and 600 million euros
into EBS but raised that amount to take into account the
additional capital the building society needs under an EU/IMF
bailout package.
"They are offering a bit more upfront," said the source,
who declined to be identified.
Cardinal is receiving backing from the Carlyle Group
[CYL.UL] and U.S. investor Wilbur Ross. The other bidder for
EBS is bancassurer Irish Life & Permanent. (IPM.I)
Final bids for EBS were submitted on Monday. EBS and Irish
Life & Permanent declined to comment on the process. No one
from Cardinal was immediately available to comment.
The building society needs to raise an additional 438
million euros by the end of February in order to raise its core
tier one ratio, a key measure of financial strength, to 13.5
percent.
Under the terms of the 85 billion euros EU/IMF package,
Ireland has vowed to overcapitalise and shrink its banking
sector, which was brought to the brink of collapse through
reckless property lending.
Dublin has already injected 875 million euros into EBS and
is conducting another capital and liquidity review of lenders,
including EBS, this quarter. Bids for the building society are
conditional on that review.
Under the Irish Life & Permanent bid, the government would
have to inject the additional capital but Irish Life has
offered the state a minority stake in a new merged group
consisting of its permanent tsb banking arm and EBS, the source
said.
Irish Life has also offered warrants for the state to take
a stake in the insurer, the source said. Shares in the group
finished up nearly 4 percent at 85 euro cents on Tuesday.
Under the Cardinal bid, the government would not have to
pump any further cash into EBS unless future losses wiped out a
large chunk of Cardinal's investment. Cardinal will offer the
government warrants to take a 10 percent stake in EBS, the
source said.
The source also said that EBS was looking at the
possibility of raising capital through a liability management
exercise involving subordinated debt and hybrid debt during
this quarter.
Irish banks are swapping debt or buying it back at
discounted levels in a bid to reduce their reliance on state
capital.
Allied Irish Banks (ALBK.I) offered to buy back 3.9 billion
euros of subordinated debt at a 70 percent discount last week.
[ID:nLDE70C1J8] $1 = 0.747 eur (Reporting by Carmel Crimmins, editing
by Matthew Lewis)
Source: Reuters.Com
