Readers like you keep news free for everyone.
More than 5,000 readers have already pitched in to keep free access to The Journal.
For the price of one cup of coffee each week you can help keep paywalls away.
# Black Thursday
Government prepares to take majority stake in AIB as top management departs
Major shake-up at the bank which is to be effectively nationalised.
THE GOVERNMENT IS preparing to effectively nationalise Allied Irish Bank (AIB), following the announcement from the Central Bank that it needs a further €3 billion in capital.
The revelation comes amid news of a major management shake-up at the bank: managing director Colm Doherty and chairman Dan O’Connor are both to depart the bank, it was announced this morning.
The bank will now seek to raise €5.4 billion in a stock offering before 31 December, it said in a statement.
The National Pensions Reserve Fund Commission, which is guaranteeing the sale, may buy as much as €3.7 billion of stock and convert €1.7 billion of preference shares. It is buying the shares at a fixed price of 0.50 cent per share – a discount of 9.4 per cent on the closing price yesterday.
Analysts said the announcement about AIB was the big surprise from this morning’s Central Bank statement, which also put a final tally on the cost of bailing out Anglo.
Sebastian Orsi, an analyst with Merrion Capital told Bloomberg:
The big surprise is the increased capital number for Allied Irish. The government could end up with over 90 percent of the group, subject to investor take-up of the planned stock sale to shareholders.
Shares in AIB tumbled as a result of the news.
