'Peculiar elements' to AIB's petition for capital reduction

A High Court judge has said there are “peculiar” features to an application for court approval for a €6 billion reduction of share capital being sought by AIB for several purposes, including to clear losses and possibly pay a €280 million dividend next month to the National Pension Reserve Fund.

The effectively nationalised bank also wants the reduction to establish a reserve to meet other liabilities, the court heard. If it is approved, AIB said it was satisfied it will continue to meet its debts as they fall due.

Mr Justice Peter Kelly has listed the bank’s petition for hearing at the Commercial Court later this month. In transferring the proceedings to the court yesterday, he said there were “peculiar elements” involved and what was envisaged was “not the more common form of capital reduction”.

Denis McDonald SC, for AIB, said the proposed reduction was €6 billion and the bank wanted to reduce its share capital in two ways. It had a €2 billion deficit in its revenue reserves and wanted to free up funds, some of which would be used to pay (if approved by the Central Bank) a dividend to the National Pension Reserve Fund due on May 14th, he said.