AIB EGM:AIB, WHICH yesterday received the go-ahead from shareholders to sell its stake in MT Bank, has put plans to dispose of its UK business "on hold" after failing to receive satisfactory offers, according to the bank's new executive chairman David Hodgkinson.
Mr Hodgkinson, a former chief operating officer of HSBC, was speaking after the egm convened to seek shareholder approval for the sale of AIB’s 22 per cent stake in US bank MT. Now approved, the transaction will generate capital of about €900 million.
When added to the €2.5 billion gain on the disposal of AIB’s 70 per cent stake in Poland’s Bank Zachodni WBK, this leaves €7 billion to raise if it is to meet the capital target of €10.4 billion set by the Financial Regulator.
AIB’s UK business, which includes First Trust Bank in Northern Ireland, has been on sale since March, but Mr Hodgkinson said plans to sell this division were now on hold as it could not be sold on a satisfactory basis. All options would be re-examined.
AIB will launch a €5.4 billion rights issue this month, underwritten by the National Pensions Reserve Fund. Investors at the egm were informed that the value of their shareholdings would never fully recover because of the highly dilutive effect of the rights issue.
Mr Hodgkinson said although there would be “some residual value” left in existing shares “they will never get . . . close to where they were”.
Just over one billion AIB shares are in issue at the moment, while about 10 billion new shares will be issued in the capital raising exercise. Following the rights issue, the Government’s stake in the bank will rise to as much as 92 per cent from its current level of 18.6 per cent.
Mr Hodgkinson said he would receive a salary of €500,000 if he remained with the bank for a year. He stressed that his position was an interim one. Once the international search for a new chief executive was completed, the chairman’s role would become non-executive. He said the position of chief executive was unlikely to be filled by the end of the year. “Six months is more realistic,” he said.
At the start of the egm, he expressed “deep regret” to shareholders for the events that led the bank to its current position.
Managing director Colm Doherty formally stepped down from the board yesterday. His resignation was announced last month.
