Business

State cuts its stake in AIB to 32.6% following €1bn buyback

Transaction will bring to roughly €14.9bn the total received by Government from the bank since bailout

Minister for Finance Michael McGrath said "this is another important step in normalising the relationship between the State and AIB". Photograph: Sam Boal/RollingNews.ie

Ian Curran
Fri May 3 2024 - 07:29

The State has further reduced its bank bailout-era shareholding in AIB after the lender bought back nearly €1 billion of its shares from the Government.

The transaction, which was given the green light by AIB shareholders at a recent extraordinary general meeting, will see the Government’s stake in the bank fall to 32.6 per cent.

In a statement, Minister for Finance Michael McGrath said that when combined with the latest €273 million annual dividend, which will be received next week, “the total amount returned to the State from our investment in AIB will reach [approximately] €14.9 billion.”

The off-market transaction saw the Government, advised by investment bank Rothschild & Co and William Fry, acquire the stock at a final price of almost €5.04 per share.

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“Significant progress has been made in reducing our shareholding in AIB from circa 71 per cent at the beginning of 2022 to circa 32.6 per cent today. While the State remains the largest shareholder in AIB, this is another important step in normalising the relationship between the State and AIB with the free float in the bank now increasing to circa 67.4 per cent.”

AIB announced the plan to buy back the shares in March after unveiling a higher-than-expected spike in profits last year amid heightened interest rates, to deliver the strongest financial performance in its history.

The Irish Times reported at the time that further reductions in the State’s stake are likely to increase pressure on Mr McGrath to lift crisis-era pay restrictions at the bank. In its latest annual report, AIB chairman Jim Pettigrew said that he had, and would continue to, engage with the Minister on the matter, which the board considers a “a material risk” to retaining senior staff.

[ State exit from AIB in 2025 ‘within the bounds of possibility’, says chief executive Colin Hunt ]

“It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds which were used to support the banking sector should be recovered and put to more productive use,” said the Minister on Friday. “The State still retains a valuable shareholding in AIB and I will continue to assess additional opportunities for share sales as they arise.”

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times

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