Minister for Finance Michael McGrath hired three investment banks on Monday to sell a further 5 per cent stake in AIB as the State continues to claw back the bank’s crisis-era bailout.
The Minister is expected to raise close to €500 million from the sale of a stake, having launched the transaction immediately after the Dublin market closed. Goldman Sachs, Morgan Stanley and BNP Paribas were mandated to sell the shares.
As a result of the placing, the overall size of the State’s shareholding in the company will be reduced from 45.96 per cent to about 40.8 per cent.
The share sale will increase the amount that AIB has paid back of its €20.8 billion rescue to about €13.6 billion. The Government’s remaining stake currently has a market value of about €4.3 billion – meaning that taxpayers are currently sitting on a €2.9 billion cash shortfall on their investment in the bank.
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The Government has been selling down its stake since early last year on three fronts: dribbling small amounts of shares into the market; placing larger 5 per cent blocks on occasion; and participating in stock buy-backs by the bank. The holding stood at 71 per cent in January 2022 before the sell-down programme began.
The cash recovery to date also includes proceeds from an initial public offering in 2017, redemption of bailout bonds, interest, guarantees and dividends.
AIB last week hiked its full-year net interest income forecast for a third time in 2023, as savers have been slower than expected to move from low-rate accounts into its more attractive products.
The bank now expects its net interest income (NII) to top €3.75 billion – €150 million higher than its previous guidance, it said last Wednesday.
It sees its net interest margin (NIM) – the difference between the average rates at which a bank funds itself and lends on to customers – coming in higher than 3 per cent, up from its previous forecast for a figure in excess of 2.9 per cent.
AIB’s NII for last year amounted to €2.16 billion, while its net NIM was 2.74 per cent.
[ AIB ‘may return €4.3bn’ to shareholders in coming yearsOpens in new window ]
.While AIB and the other main Irish banks have increased rates on certain deposit products to as much as 3 per cent in recent months following a series of European Central Bank (ECB) rate hikes, about 95 per cent of household savings remain in on-demand – or overnight – accounts that are earning little or nothing. AIB indicated that it expected the migration to pick up.
The shift by borrowers into higher-rate savings products “has been a little slower than we would have imagined”, AIB chief financial officer Donal Galvin told analysts on a call.
AIB’s €29.5 billion of excess customer deposits that are resting in the Central Bank are earning a rate of 4 per cent, up from zero in July last year, before the ECB started to increase its rates in an effort to fight inflation.
