THE GOVERNMENT HAS agreed in principle to AIB’s €1.2 billion share buyback proposal, which will reduce the State’s stake in the bank to 3%. 

The transaction, which is subject to shareholder approval and market conditions, will see the company acquire its shares from the State by way of an off-market purchase.

The State currently has a shareholding in AIB of just under 12%. The completion of this transaction would see the shareholding reduced by a further 8%.

Minister for Finance Paschal Donohoe said it is expected that the buyback will be completed shortly after AIB’s annual general meeting (AGM) on 1 May. 

The Minister said AIB announced that discussions were underway with the Department for the share buyback as part of its annual results last year. 

“I can now confirm that I have agreed in principle to participate in this buyback on a fully directed basis,” he said. 

Donohoe said the successful completion of the transaction will see “a further €1.2bn returned to the State” in addition to the dividends of around €100m that are due to be received in May. 

He also said the transaction will allow the State to further reduce its shareholding in AIB “and get closer to exiting its position in the bank”.

“Further details in relation to this transaction will be announced in due course,” he added. 

AIB made a profit of €2.35bn after tax last year, allowing it to return €2.6 billion to its shareholders. 

In January, the State sold a 5% stake in AIB at a price of €5.60 per share, generating around €652 million upon settlement.

The Department of Finance is being advised by William Fry LLP in relation to the transaction.