The State has recovered €17.9 billion of AIB’s bailout bill to date following its latest sale of shares in the bank. Minister for Finance Paschal Donohoe sold a 5 per cent stake in the bank late on Monday evening at €5.60 per share to stock market investors, representing a 2.2 per cent discount on where the stock closed in Dublin hours earlier. The deal raised €652 million, his department said in a statement.
“It is now a realistic target that the State could exit its position in AIB later this year should market conditions allow,” said Mr Donohoe, who was reappointed as Minister for Finance last week on the formation of the new Government.
The Coalition’s remaining 12.5 per cent stake is worth €1.67 billion, meaning taxpayers remain about €1.23 billion underwater on their crisis-era €20.8 billion investment in the bank.
Analysts estimate that the stake will fall to zero by the middle of this year as AIB is expected to use hundreds of millions of euros of surplus capital on its balance sheet to buy back more government shares after it publishes its 2024 results in early March — and the Government continues a programme of drip-feeding small amounts of stock into the market.
The State’s recovery of AIB’s rescue bill is on a cash-in, cash-out basis, and also includes proceeds from an initial public offering in 2017, redemption of bailout bonds, interest, guarantee fees and dividends received from the bank.
“This well-supported transaction is another important milestone in the process of returning the State’s investment in the group and a normalisation of the share register,” said AIB chief executive Colin Hunt of the latest stock placing. “This brings the total proceeds returned to the State to circa €18 billion.”
Mr Donohoe noted that each of the six 5 per cent block placings of AIB stock that the government has undertaken since early 2022 has been at a higher price than the previous trade. “This latest transaction achieved a price which was 14 per cent higher than what was achieved in the previous transaction last June. Once again this transaction was well received with significant demand from a large number of high-quality international institutional investors.”
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The timing of the latest block sale of AIB shares follows a 44 per cent surge in AIB’s shares over the past 12 months to an all-time high of €5.785 during Monday’s trading session.
Banking stocks have jumped in value in recent years as a spike in official interest rates drove profits higher. The remaining Irish banks have also benefited as they carved up most of the loan books of Ulster Bank and KBC Bank Ireland as they retreated from the market.
AIB is seen by analysts, however, as one of the most exposed large lenders across Europe to falling interest rates. However, this is expected to be partially offset as loan book growth is expected to continue in an expanding economy.
The removal of the government as a shareholder will most likely result in basic pay restrictions being lifted at AIB. Mr Donohoe decided in late 2022, when he was last minister for finance, to remove a pay cap at Bank of Ireland after the State sold its remaining shares in that bank.
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