AIB flotation likely to be triggered soon

The Minister for Finance, Michael Noonan, is poised to trigger the start of the long-awaited flotation of AIB as early as next week, ignoring a Labour Party motion that was passed in the Dáil on Thursday that sought to delay the deal.

A successful sale of a 25 per cent stake in the bank, raising between €2.5 billion and €3 billion, would mark the last major decision by the Minister, who signalled on Thursday he would not put himself forward for a Cabinet position when Taoiseach Enda Kenny was replaced next month.

Sources familiar with the matter told The Irish Times that Mr Noonan could give the go-ahead as soon as next week for the issuance of an intention to float (ITF) announcement for AIB. They said the formal ITF statement would most likely be issued to the stock exchange before a new Fine Gael leader was selected on June 2nd.

However, timings could drift beyond that, particularly if global stock market conditions turned volatile. AIB's chief executive, Bernard Byrne, said the bank was "IPO ready" in March when it reported a €1.7 billion profit for 2016 and paid a €280 million dividend to the Government, its first shareholder payment since 2008.

Michael Noonan set to trigger AIB flotation

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It would take about four weeks from the time of the ITF announcement for AIB’s management and investment banks and securities firms working on the deal to carry out an investor roadshow and price the deal. If the deal was announced next week, it would not be priced until two weeks after the UK general election, giving the market plenty of time to assess the implications of that vote.

Bailout bill

Mr Noonan took up office in March 2011 as the country’s banks were in the middle of a round of stress tests ordered by the troika bailout team under the Republic’s international rescue programme, which it entered in late 2010. The taxpayer bill for bailing out the country’s banks rose to a gross €64 billion after the stress tests.

A successful sale of a stake in AIB would book-end Mr Noonan’s time as Minister for Finance. The bank has so far paid back about €3.3 billion of the €20.8 billion injected into it between 2009 and 2011 to save it from collapse as its bad loans spiralled during the financial crisis.

Mr Noonan turns 74 next week.

A spokesman for the Department of Finance said the Government decision to float AIB "remains valid" even after a new minister is appointed, giving additional flexibility on timing.

Meanwhile, the department also played down the impact of the passing of the Labour Party private members 'motion on Thursday proposing to delay the AIB share sale until European Union fiscal rules are relaxed. During a Dáil vote on the matter, nobody on the Government side indicated their preference and the motion was deemed to have passed.

Opposition TDs believed that Government TDs were distracted by the internal party leadership challenge.

“Private members motions are not legally binding on the Government,” the department said in a statement. “The Government position remains unchanged. The programme for partnership government clearly allows the Minister to sell up to 25 per cent of Allied Irish Banks up to the end of 2018.”