Paschal Donohoe’s earliest jobs when he first became Minister for Finance in June 2017 was to sign off on the initial public offering (IPO) of AIB to accelerate the recovery of the bank’s crisis-era bailout.
He would live to regret not following up quickly with further share sales as AIB’s stock remained on a high for next 12 months or so, before sliding over the following three years – hit by wider market jitters, concerns over low interest rates and weak loan demand and, of course, the initial effects of the pandemic.
It would be early 2022 before Donohoe rebooted the AIB payback plan. The taxpayer stake has fallen from 71 per cent to below 19 per cent through a mix of constant drip-feeding of stock on to the market, larger placings, and the State participating in AIB share buy-backs under Donohoe’s successors, Michael McGrath and Jack Chambers.
But what had become a routine 5 per cent stake sale in November in recent years was put on ice as we headed to the polls. Talk has been mounting that the new Government – most likely with Donohoe once again in the finance role – will move quickly to make another stock placing.
The €3 billion or so raised from selling down AIB shares in 2024 was earmarked in the October budget for infrastructure and development. The new programme for government marks these as priorities.
Reports over the weekend suggest a 10 per cent stake sale could be in the offing before AIB goes into a pre-results closed period on February 5th. That would raise close about €1.25 billion at current levels, assuming a discount would be applied to sell a large block in the market. It would bring the total taxpayer recovery to about €18.2 billion, with the remaining holding worth about €1.15 billion.
With AIB’s shares currently trading at highs last seen seven years ago and the bank seen by analysts as one of the most exposed large lenders across Europe to falling interest rates, the new government might want to crack on with selling down the remaining stake – even if it crystallises a loss on the bailout and puts the next finance minister under pressure to remove executive pay restrictions.
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