State to reduce AIB stake to 57% by selling more shares

Minster for Finance Paschal Donohoe put a further 5 per cent stake in AIB on the market on Monday evening in a move that is expected to raise about €390 million.

The placing of 134 million shares with institutional stock market investors, by way of a so-called accelerated bookbuild, will reduce the State’s stake in the bank to about 57 per cent and mean that the Minister will have raised about €1 billion so far this year from the disposal of AIB shares.

The shares are expected to be priced at about a 5 per cent discount to Friday’s closing price of €3.06, according to market sources.

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Following the placing, AIB will have returned about €11.5 billon of cash to the Government since its €20.7 billion crisis-era bailout. Taxpayers’ remaining holding in the bank is worth about €4.75 billion – meaning the State remains about €4.45 billion under water on the amount it pumped into the bank to keep it from imploding during the financial crisis.

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This is the second 5 per cent stake placing that Mr Donohoe has carried out this year in AIB and comes in addition to regular drip-feeding of small amounts of shares in the bank on to the market. The holding stood at 71 per cent at the start of 2022.

The Government announced in late September that it had sold its remaining shares in Bank of Ireland, making it the first Irish lender to return fully to private ownership following the State’s crisis-era €64 billion rescue of the financial system.

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The sale of the remaining shares brings to almost €6.7 billion the amount returned by Bank of Ireland to taxpayers since they were forced to commit €4.7 billion to the ailing group at the height of the crisis, the Department of Finance said. It is the only Irish bank to repay its aid bill to date.

The recovery, amounting to about €2 billion more than was put into the bank, includes money received from the sale of bank shares, preference stock and bailout bonds following the crisis. It also includes dividends and the collection of guarantee fees.

Meanwhile, the Government saw its stake in Permanent TSB (PTSB) fall to 62.4 per cent today from almost 75 per cent previously, as UK banking giant NatWest took a 16.7 per cent stake in PTSB as part payment for a portfolio of loans that previously belonged to its Ulster Bank unit. Ulster Bank is currently in wind-down in the Republic.