Fiasco over AIB cashless branches will hang over bank’s shares

AIB may be feeling fairly bruised after its botched attempt last week to turn 70 of its branches into cashless locations – especially when rivals Permanent TSB and Bank of Ireland are further down the road of not dealing with cash at counters across swathes of their networks.

But AIB’s whole approach left it open to political and public attack that led to its volte-face on Friday.

Unlike the other banks that have dispensed with cash at counters in certain branches, AIB decided to go one step further and remove ATMs from the affected properties.

Then, rather than own the decision and come out and defend it, the bank used its press release last Tuesday to try and deflect attention towards reheated news that it was completing the hiring for 500 roles by the year end (most of which were announced in late 2020) and 700 temporary staff to help deal with account openings as Ulster Bank exit (which was also well flagged).

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The game was up when Taoiseach Micheál Martin voiced his displeasure on Thursday from Singapore, during an official visit to Asia.

But investors in Irish banks will only see the whole episode as another example of political interference in the sector.

And why should ordinary Irish citizens care, you might ask. Because these are the fellows the Government is relying on to buy shares as it continues a strategy of selling down bank stakes stemming from crisis-era bailouts.

AIB has returned a little over €11 billion of its €20.8 billion rescue bill to date. Taxpayers continue to own a little over 63 per cent of the bank – a holding that is currently valued by the market at €3.62 billion as the stock trades at half of its so-called book value.

There are a number of reasons for the discount. And the noisy Irish political landscape is up there.

If investors were already worried, they would have been terrified to hear what Sinn Féin’s finance spokesman and potential future finance minister, Pearse Doherty, had to say over the weekend. He told RTÉ Radio on Sunday that had he been in Donohoe’s shoes he would have rung the bank and directed them not to go cashless in branches.

He also used the interview to highlight that Sinn Féin in Government would stop selling AIB shares immediately to keep it under State control.