* Ross expected to see profit of over 150 pct
* Purchase was early sign of confidence in Ireland
* Says remains positive on bank's prospects
* EBA restrictions on board memberships a factor in sale
(Adds Ross saying bank's prospects good, analysis, background)
By Laura Noonan and Freya Berry
LONDON/DUBLIN, June 9 U.S. billionaire Wilbur
Ross will sell his entire holding in Bank of Ireland (BoI)
three years after his pioneering investment kept the
struggling bank out of state hands, but he said he remained
confident about its prospects.
Ross, whose fund specialises in distressed assets, was among
a group of North American investors who bought a 35 percent
stake only months after Ireland signed up to an EU/IMF bailout
in an early vote of confidence in the debt-ravaged country.
He is set to make a healthy profit on the deal, with two
sources familiar with the matter saying the shares would be
priced at between 26 and 27.5 euro cents each, compared with the
10 cents the bank was trading at when Ross bought the stake.
This is "definitely not a negative comment on BoI or
Ireland... This has been a terrific investment for us and our
investors," Ross told Reuters in response to emailed questions.
"With the continued appreciation of our bank holdings, we
were getting so concentrated in banking that we had to cut
back," he said.
In particular, he said European rules that limit the number
of bank boards investors can sit on contributed to the decision.
Ross in April told Reuters he was assessing distressed
assets in southern Europe and was looking to make some
investments in the next few months.
WATSA KEEPING STAKE
Fellow investor Prem Watsa, who was also part of the 2011
consortium and who sold shares with Ross in March, said Ross's
decision was "entirely unrelated to the business" and pledged to
hold his own 5.8 percent stake for the long term.
"Bank of Ireland and Ireland generally are only beginning to
see a return to their future potential," Watsa said.
The March sale, which included a ban on further share sales
for 90 days, cut Ross's stake to 5.5 percent from around 9
percent. The Irish government remains the largest shareholder
with 14 percent.
Ireland's Finance Minister Michael Noonan in December said
that while the government had no interest in running banks long
term, it was under no financial or political pressure to sell.
FREE FLOAT BOOST
The sale will increase the free float for the bank, which is
one of the few large listed Irish companies that do most of
their business in the domestic market.
Merrion Stockbrokers analyst Ciaran Callaghan said there was
nothing in Bank of Ireland's recent performance to indicate it
was running out of steam.
"I don't think it's anything to do with losing confidence
in Bank of Ireland or the management team. They should be fine
for the European stress tests," he said.
The bank said in March it had been profitable in the first
few months of the year, achieving higher margins on new lending,
although demand remained muted.
Economists polled by Reuters last month forecast gross
domestic product growth in Ireland of 2.1 percent in 2014, up
from a 0.3 percent contraction last year, though unemployment in
the first quarter fell by less than anticipated.
Deutsche Bank is acting as sole bookrunner on the
placement of Ross's 1.8 billion shares.
One of two sources said the placement comes at a discount of
between 3.2 and 8.5 percent to Monday's closing share price.
That would price the holding at between 468 million and 495
Ross said he did not initially plan to sell his whole stake,
but was advised by an investment bank to avoid an overhang.
Bank of Ireland's share price closed on Monday at 28.4
cents, down from a peak of 39 euro cents earlier this year.
(Additional reporting by Padraic Halpin; Writing by Conor
Humphries; Editing by Pravin Char and David Evans)