State puts 5% AIB stake on market to end majority ownership

Minister for Finance Michael McGrath put a further 5 per cent stake in AIB on the market on Tuesday evening in a move that will see the bank fall out of majority State ownership for the first time since its €20.8 billion bailout during the financial crisis.

Traders from Goldman Sachs, Bank of America and AIB’s Goodbody Stockbrokers unit began to sell the shares immediately after the stock market closed in Dublin.

The transaction will cut the State’s holding to 46.9 per cent and is expected to raise about €475 million. That is based off an expectation that the shares will be sold at a 5 per cent discount to Tuesday’s closing price, according to market observers.

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

The Government had a 71 per cent stake in AIB at the beginning of January 2022, when it 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.

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Following the completion of the latest deal, the State will have recovered an estimated €12.6 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 €4.7 billion.

AIB’s return to majority private ownership follows on from the State selling its remaining shares in Bank of Ireland last September. Permanent TSB (PTSB), the only other continuing lender in the Republic, continues to be 57.4 per cent owned by taxpayers.

The Government moved late last year to lift salary restrictions at Bank of Ireland and resolved to do the same at AIB and PTSB once its holdings in each fell to an unspecified “appropriate level”.

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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”.

There is no sign that the Minister plans to lift the pay restriction in the immediate future, however.

“As previously indicated, the Minister for Finance will review further changes to the remuneration restrictions for AIB and PTSB at the appropriate time,” a spokesman for the Department said. “There is no obligation [to] do anything further on remuneration once the State’s shareholding in AIB goes under 50 per cent.”