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ECM Activity in Ireland's Financial Services Sector in 2023

Various regulatory obstacles paired with changing macro-economic issues mean that the prospects for a substantial amount of ECM activity in the relatively small quoted/listed Irish financial services sector in 2023 is slight. Our Equity Capital Markets team examines the factors influencing this in the coming year.

The main factor influencing equity capital markets activity in Ireland’s financial sector in 2023 is likely to be the State’s continuing sell-down of its remaining shares in AIB. A higher interest rate environment and the strength of the Irish economy has supported share prices in the last 12 months. However, the outlook for equity capital markets activity generally remains uncertain due to a number of macroeconomic conditions. These include increasing levels of inflation, a possible recession in many markets on the horizon, and the continuing war in Ukraine, which has led to supply chain disruptions and a rise in commodity prices. The quoted Irish financial services sector and its main participants– AIB, Bank of Ireland, PTSB and FBD - are generally well capitalised and show no signs of needing to tap equity capital markets in these troubled times.

New entrants to the market?

There are unlikely to be new entrants to the market in 2023. In terms of balance sheet fundraisings by the listed financial services sector companies, the general backdrop for fundraisings on the Irish equity capital markets is not entirely positive. That said, share prices are generally stable, and in certain cases have been increasing slightly over the last 12 months. The increasing interest rate environment is a positive influence for these companies.


The prospect of a fundraising in Ireland for any of Allied Irish Banks plc, Bank of Ireland Group plc or Permanent TSB Group Holdings plc will be led by international sentiment for the sector. In terms of fundraising for acquisitions, there has not been any recent indication that any activity is imminent. The Irish banks are reasonably well capitalized for their current operations and they show no signs of needing to tap equity capital markets. Indeed they have not signalled any necessity in the context of those absorbing acquisitions (Bank of Ireland and PTSB).

State sell downs

One notable point is the Irish State’s continued interest in disposing of its stake in the Irish banks. The third phase of the State’s sell down in AIB was announced in early January so that the sale activity will be continued until July this year – the State’s stake having been reduced to about 57% from 71% at the beginning of 2021. The State’s stake in PTSB will fall to 62% from 75% after NatWest took a minority stake following its sale of €5.2bn of Irish mortgages to PTSB in November 2022. As a result, incremental further State sell downs and changes on the registers on account of that is more likely in terms of ECM activities in the financial services sector in Ireland in 2023.


Another interesting scenario arises concerning FBD Holdings PLC. Sretaw Private Equity Unlimited Company has been building its stake in FBD and crossed the 10% threshold on 21 December 2022 by using 'contract for difference(s)’, or CFDs, for a 1.5% stake. A Norwegian insurance company, Protector Forsikring, has also been maintaining or increasing its stake.

A public acquisition in the Irish financial services sphere is unlikely in 2023. A host of regulatory approvals would be required in a bid for one of the Irish banks. Another common obstacle that arises in all similar acquisitions are that accelerated stake building is restricted by the Substantial Acquisitions Rules. These regulations prohibit persons from making a “substantial acquisition of securities” that will take them from holding below 10% to above 15% (but not more than 30%) of the voting rights of the PLC within a seven-day period. The rejection of the hostile approach for Bank of Cyprus, regulated under the Irish Takeover Rules, demonstrates the difficulties inherent in any approach to a “strategic” financial institution.


The factors detailed in this article mean that the prospect of a substantial amount of ECM activity in the financial services sector in Ireland in 2023 is slight, apart from continuing State disposals of interests. That said, one can always be hopeful, especially considering the financial sector was the most active sector with regards to European ECM issuances in the first half of 2022, making up 23% of the total number of transactions and three of the Top 10 ECM deals were accelerated bookbuilds by banks. These included Nordea’s €1.8bn block trade; Deutsche’s €1.3bn deal; and Barclay’s €1bn transaction. Even in the midst of difficult times, with the right forward-looking vision and efficient management team, there will always be structural growth stories and opportunities for the success of financial services companies.

For more information and expert advice in navigating similar transactions, contact a member of our Equity Capital Markets team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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