THE STATE INTENDS to sell part of its 71% stake in AIB over the next six months, Minister for Finance Paschal Donohoe has announced this morning.
The holding — which the Government built up after rescuing the bank in the wake of the 2008 financial crisis — will be drip-fed to the market through a pre-arranged trading plan managed by US bank Merrill Lynch International.
The plan is similar to the one used by the Government to sell part of its remaining bailout-era stake in Bank of Ireland this year.
Merrill Lynch has been mandated to “target a sale of up to, but no more than, 15%” of the Government’s stake in AIB, according to a statement from the Department of Finance this morning.
“In order to ensure that the taxpayers’ interest is protected, shares will not be sold below a certain price per share, which the Department of Finance will keep under review,” it said.
“The trading plan will become operational in mid-January and will terminate no later than six months thereafter, but can be renewed at the Minister’s discretion.”
Commenting on the announcement, Donohoe said AIB’s financial performance in recent times justified the sale but he expects the process of selling the remaining stake to take longer than in Bank of Ireland’s case.
“With our share trading programme proving successful in reducing our stake in Bank of Ireland, I am now announcing the restart of our phased exit from the State’s larger investment in AIB,” the minister said.
“The bank’s financial performance has improved significantly while investor appetite for banks is also recovering, so these conditions provide a supportive environment to reduce our shareholding in the bank over time.
“Given the thinner liquidity in AIB shares, I expect the pace of share sales to be slower than what we’ve seen at Bank of Ireland, but it is important that we make further progress on what will be a multi-year journey”.
In a statement, AIB chief executive Colin Hunt welcomed the announcement and thanked Irish taxpayers for the €20.8 billion bailout the bank received during the financial crisis.
“AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis,” he said.
“The Group’s robust balance sheet, its digital capability and the scale of its operations means it will continue to play a key role in supporting the Irish economy and our customers.”
But Sinn Féin finance spokesperson Pearse Doherty has slammed the decision to offload the Government’s stake in the bank.
“The decision by the Minister to sell 15% of the total trading volume of shares in AIB over the next six months is the wrong one,” the Donegal TD said. “The State’s shareholding in AIB should not be diluted but instead maintained with the taxpayer’s investment recouped through the payment of dividends, fees and levies.
“By retaining its majority shareholding in AIB, the State can and should ensure that the bank operates in the interests of its customers and wider society,” Doherty added.
“The decision made by the Minister today is premature, especially as the Retail Banking Review announced by his Department has yet to even begin.”
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