State’s AIB stake edges closer to key 50% threshold

The Republic’s stake in AIB has fallen below the 52 per cent level, putting it within a whisker of returning to majority private ownership for the first time since the financial crisis.

Minister for Finance Michael McGrath previously said that the Government parties would have a “political discussion” before lowering the stock below the key 50 per cent threshold. That is likely to involve a debate about whether to remove at that stage the crisis-era €500,000 pay cap at the bank.

However, a spokesman for the Department of Finance said on Friday that “there is no obligation do anything further on remuneration once the State’s shareholding in AIB goes under 50 per cent”.

AIB disclosed to the stock market on Friday that it has been informed the taxpayer holding has fallen to 51.98 per cent, as the Ireland Strategic Investment Fund, which holds the investment on behalf of the Minister, has continued drip-feeding stock on the market over the past month or so.

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The Government had a 71 per cent stake in AIB at the beginning of January 2022, when the Government started a programme of selling down stock through a combination of drip-feeding shares on to the market, the placing of large blocks of stock on to the market and participating in share buy-backs.

The State is now estimated to have recovered about €12.1 billion of AIB’s €20.8 billion crisis-era rescue, including proceeds from the sale of shares, redemption of bailout bonds, dividends, interest and guarantee fees. Its remaining stake in the bank is valued at about €5.2 billion.

Then minister for finance Paschal Donohoe moved late last year to remove salary restrictions at Bank of Ireland, after the Government sold its remaining shares in the bank.

He said a similar move would occur at AIB and Permanent TSB once State holdings in each fall to an unspecified “appropriate level”.

However, draft versions of a Department of Finance banking review report completed last November, and shared with The Irish Times under a Freedom of Information request, showed the review team had planned at one stage to recommend that the minister no longer have a say on banker salaries when the State is “no longer majority shareholder”.