Minister for Finance Michael Noonan has said it could take more than 10 years to fully re-privatise AIB but that he was "absolutely confident" that the bank would repay all of its €20.8 billion bailout money to taxpayers.
“I can’t see the whole thing being sold inside of 10 years,” the minister said yesterday at a bank event in Dublin. “It may stretch longer. It will depend on circumstances…but the overriding consideration is to maximise the return for taxpayers.”
Mr Noonan added that it was “hard to predict” the timeframe accurately due to external factors. “I’m only trying to give you a vague indicative timeframe,” he said.
Mr Noonan said that if he is returned to Government after next year’s general election he would press the button on a stock market IPO of the bank.
“If the government is back in office, immediately I will press the button to make the arrangements for an IPO of AIB shares,” he said. “We intend, under advice, to sell 25 per cent.”
He said the main listing would be on the London Stock Exchange, adding that there were two potential windows of opportunity next year - May/June and September/October.
“It might be in our interest from a value point of view to have the half year [financial]returns in. It would probably make the bank more valuable. So I’m tending towards an autumn window but there is a possibility of an earlier window if that suits.”
His intention was to get the "best value for Irish taxpayers", however long that might take. The National Treasury Management Agency currently values AIB at €11.7 billion, indicating that the State could net almost €3 billion by selling a quarter share in the bank.
Mr Noonan said a stock market IPO would put a firm value on the bank. “The market is the test,” he said. “As soon as we get 25 per cent out there and the shares are being bought and sold, everybody will know what the value is.”
AIB yesterday paid the State €1.64 billion as a first repayment of its bailout funds. This followed shareholder approval on Wednesday for a major reorganisation of its capital. Mr Noonan described it as a “red letter” day for the bank and the State. The funds would be put towards debt repayment, he added.
He was speaking at an announcement by the Strategic Banking Corporation of Ireland that it has agreed an additional €200 million credit facility with AIB to support lending to Irish SMEs.
Bernard Byrne, AIB's chief executive, said 5,000 customers had availed of the first fund of €200 million, with loans ranging in size from €1,000 to €1 million.
SBCI chief executive Nick Ashmore said the bank had committed €675 million of its initial €800 million in funding, with further allocations planned in January. Loans attract an interest rate of 4.5 per cent.
