State holding in AIB falls below 50% after share sale

The Government has raised €480.5 million from the sale of a 5 per cent stake in AIB in a deal that has pushed the bank into majority private ownership for the first time since its crisis-era bailout.

The sale late on Tuesday of 132 million shares at €3.64 each – a 4.75 per cent discount to Tuesday’s closing price – reduced the State’s shareholding in the bank to 46.9 per cent, the Department of Finance said in a statement on Wednesday.

The State has now recovered about €13 billion of AIB’s €20.8 billion crisis-era rescue, Minister for Finance Michael McGrath said. That comprises proceeds from the sale of shares, including an initial public offering in 2017, the redemption of bailout bonds, dividends, interest and guarantee fees.

Its remaining stake in the bank is valued at about €4.7 billion.

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AIB chief executive Colin Hunt welcomed the latest share sale as a “significant milestone” for the group as it exits majority taxpayer ownership.

“It is another important development in the process of returning the State’s investment in the group and a normalisation of the share register,” he said. “AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis.”

Shares in AIB have gained more than 70 per cent since the Government started 18 months ago to sell down what was then a 71 per cent stake in the bank. The surge has been driven by rising interest rates, which is boosting the bank’s income, and Mr Hunt’s deals to acquire much of Ulster Bank’s loan book, as the latter exits the market.

However, Irish bank stocks remain off their year-to-date highs reached in March, before financial stocks globally were hit by the collapse of some regional US lenders, including Silicon Valley Bank, and Credit Suisse’s rescue by fellow Swiss group UBS.

The programme of selling down AIB shares in the past 18 months has included drip-feeding stock on to the market, placing large blocks of stock with institutional investors and the State participating in share buy-backs by the bank.

“The price achieved on this transaction was circa 23 per cent higher than what was achieved in our previous [block share sale] transaction in AIB last November while also achieving a lower discount,” said Minister for Finance Michael McGrath.

The November deal was priced at a 5.1 per cent below the prevailing share price, while an earlier block sale in June last year took place at a 6.5 per cent discount.

“The transaction was well received with significant demand from a large number of international institutional investors,” the Minister added.

The Minister has committed to continuing to drip-feed AIB shares on to the market until late January next year, though he has agreed not to carry out a block trade for at least 90 days as part of a “lock-up period” that typically follows the placing of a large amount of stock in one go.

“This is a landmark transaction for both the bank and Government,” said John Cronin, an analyst with Goodbody Stockbrokers, which is owned by AIB. He added that the increased level of tradable AIB shares in the market will boost liquidity in the stock.

Mr Cronin estimates that the State’s stake will fall naturally to about 40 per cent by the year end, as the Government continues to sell stock into the market.