By Jonathan Saul and David Dolan
DUBLIN/TOKYO (Reuters) - Markets welcomed Ireland's bank bailout on Monday as two large Asian banks were able to tap private investors to bolster their balance sheets.
Shares in two of Ireland's three main banks soared after the government agreed to inject 5.5 billion euros ($7.7 billion) into the trio, taking one under its control, in a move which should boost lending to companies and homeowners.
On the other side of the globe, Japan's Mizuho and Singapore's DBS said they will raise a total of $6.7 billion, joining other Asian banks in shoring up capital amid an economic downturn which has led to higher bad loans and a drop in asset values.
Anglo Irish Bank shares rose initially in the wake of the plan but were down just over 28 percent by midday on concerns it may need more cash. The bailout, announced on Sunday, will give the government 75 percent control of the lender.
Investors have been waiting for months for an Irish bailout plan to match schemes in other countries and pressure intensified last week after Anglo Irish revealed its former chairman Sean FitzPatrick, who quit last week, had kept shareholders in the dark about 87 million euros worth of loans he had received from the lender.
Meanwhile, Bank of Ireland shares jumped nearly 43 percent and Allied Irish Banks were up 24 percent. They will get a capital boost in return for giving the state 25 percent of voting rights on major issues.
"While the market will want to see some significant equity issuance in the New Year, this is a good start," said analyst Scott Rankin of Davy Research in a note.
Rankin noted that on top of the 5.5 billion euros, the government said that it had a substantial pool of additional capital available to underwrite and otherwise support the issuance of core tier 1 capital.
"This should help put a floor under the banks and get us into the New Year," Rankin said.
PREFERRED STOCK
Elsewhere Mizuho Financial Group, Japan's No.2 bank, will sell 355 billion yen, or $4 billion, of preferred shares, almost a fifth more than originally planned, to domestic institutions.
And DBS, southeast Asia's biggest lender by assets, will raise S$4 billion ($2.7 billion) via a rights issue priced at a hefty 45 percent discount to its last closing price.
The latest moves come a week after Asia-focused Standard Chartered Plc completed a $2.7 billion fundraising via a rights offer which was 97 percent taken up by shareholders.
Analysts do not expect further capital raising by major banks in Japan and Singapore -- at least in the near future -- after Mizuho's rivals Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group already issued shares to shore up their balance sheets.
Singapore's United Overseas Bank and Oversea-Chinese Banking Corp were already well capitalized and analysts said DBS' move was aimed at matching its rivals.
"For now, it seems the theme of selling bank stocks on their capital raising is over," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
Shares of Mizuho closed 4 percent higher in Tokyo as the issue of preferred securities not convertible to common stock relieved investor concern about potential dilution.
Shares of DBS fell 5 percent as investors sold the stock to avoid pouring new funds into the Singapore bank. The shares, which were suspended ahead of the announcement, earlier dropped as much as 11 percent to a 5-1/2 year low.
Japan's top three banks have now announced plans to raise nearly 1.7 trillion yen ($18.9 billion) between them.
The Irish government said it would make an initial investment of 1.5 billion euros in Anglo Irish Bank, giving it control and a fixed annual dividend of 10 percent. Dublin said it would make further capital available if required.
The government will also invest 2 billion euros each in Bank of Ireland and Allied Irish through preference shares.
"The government's commitment to make further capital available ensures that the bank will continue to be a sound and viable institution," Anglo Irish Chairman Donal O'Connor said in a statement.
Bank of Ireland said the injection would strengthen its capital base and give it the flexibility to raise more cash.
($1=.7164 Euro)
($1=1.459 Singapore Dollar)
(Additional reporting by Steve Slater in London and Kevin Lim in Singapore; Writing by Chris Wickham; Editing by David Holmes)
