Indian-born Canadian buying major stake in Bank of Ireland

July 28th, 2011 - 12:33 pm ICT by IANS  

Toronto, July 28 (IANS) Toronto-based Fairfax Financial Holdings Ltd, which has assets worth about $32 billion and is

controlled by Hyderabad-born Prem Watsa, is buying a big stake in the troubled Bank of Ireland to avoid its nationalization.

Reports here quoted sources close to the property and insurance management company as saying that Prem Watsa’s company has roped in Fidelity, Capital Research, Cardinal Capital Group and US billionaire Wilbur Ross to pump $1.5 billion into the Irish bank.

The deal will give Watsa’s consortium about 35 percent stake in the oldest bank in Ireland.

In its month-end deadline to the bank, the Irish government had warned it to raise money to deal with the consequences of the bursting real estate bubble or face nationalization.

But the bank resisted nationalization as it would have raised the government’s stake to 70 percent.

After bank shareholders okay the Watsa-led deal, the Irish government’s stake in the bank will be halved to just 15 percent.

The Bank of Ireland has been quoted as saying that the “long-term value investors” led by Watsa have “recognized how the bank has faced up to and focused on dealing with its challenges.”

Ireland had received an 85-billion pound EU-IMF bailout last year to tide over its financial crisis which led to the closure two of the country’s six financial institutions and merger of two others.

Called the Warren Buffett of Canada, Prem Watsa, 62, is a chemical engineer from the Indian Institute of Technology in Chennai. He moved to Canada after his graduation in 1972.

Watsa founded the Fairfax Financial Holdings Group Ltd. in 1985 and has been its chairman as well as CEO since then.
He is cited in financial circles in North America for having forecast the 2008 subprime mortgage crisis in the US.

An MBA and a chartered financial accountant by training, Watsa not only heads one of Canada’s top financial groups, but is also chancellor of the prestigious University of Waterloo.

(Gurmukh Singh can be contacted at gurmukh.s@ians.in)

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