US sale will give BoI hefty war chest

THE BANK OF IRELAND is to sell its minority stake in Citizens, the US bank, for an estimated pounds 500m, sparking specu- lation that the bank is building a "war chest" to fund future acquisitions.

The Irish bank said yesterday it was in sale talks with the Royal Bank of Scotland, Citizens' majority shareholder, and a further announcement would be made "when appropriate".

Paul D'Alton, Bank of Ireland's (BoI's) group chief financial officer, said the two banks were seeking to appoint an independent investment bank to value BoI's 23.5 per cent stake. Analysts predicted bank would raise between pounds 400m to pounds 500m from the sale, and speculated that the money could be used for future acquisitions.

BoI already owns the Bristol & West building society, and has said it would be interested in making further purchases in the UK and Ireland. The bank is thought to have looked at Birmingham Midshires, the building society that eventually fell to Halifax for pounds 750m.

Mr D'Alton said: "Our stake in Citizens is not being sold to fund an imminent acquisition." However, he admitted the bank would look at buying a UK building society, as long as the price was right. "There are two issues - availability and price," Mr D'Alton said.

BoI's decision to sell its Citizens' stake was partially influenced by the high level of US stock prices, Mr D'Alton said, but he stressed the bank was not seeking to beat the market.

BoI shares finished the day in London down 11p at 1122p. Royal Bank of Scotland shares closed up 8p at 925p.