The Government has decided to put another 5 per cent block of shares in AIB on the market, in a move that will see its holding fall close to the 25 per cent level.
The trade is expected to raise in excess of €570 million, assuming it is priced at a 5 per cent discount to Wednesday’s closing price. It would bring the State’s total cash recovery to date on the bank’s €20.8 billion crisis-era bailout to €15.7 billion.
The cash recovery to date also includes proceeds from an initial public offering in 2017, redemption of bailout bonds, interest, guarantee fees and dividends.
Its remaining 25.5 per cent holding is currently worth €3.16 billion, which would leave taxpayers €1.94 billion under water on a cash-in/cash-out basis.
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[ Michael McGrath faces AIB shares dilemma as he looks to senior role in BrusselsOpens in new window ]
The Government has been selling down its stake since early 2022 on three fronts: dribbling small amounts of shares into the market; placing larger 5 per cent blocks on occasion; and participating in stock buybacks by the bank. The holding stood at 71 per cent in January 2022 before the sell-down programme began.
Shares in AIB have risen by 32 per cent over the past 12 months. Investor sentiment towards Irish banks – whose earnings are much more sensitive to interest rates than your typical European bank – has been underpinned this year as expectations of the pace at which the European Central Bank (ECB) will cut official borrowing costs have been reined in.
[ State’s AIB stake falls below 31% as drip-feeding of shares continuesOpens in new window ]
At the start of the year, financial markets had factored in 1.5 percentage points of rate reductions. While the ECB moved earlier this month to lower official rates by a quarter of a point – bringing its deposit rate down to 3.75 per cent – economists estimate that only two more cuts are in store for the remainder of the year. At the beginning of the year, the market had been pricing in six quarter-point rate reductions.
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