State return on crisis era bailout to Bank of Ireland now stands at €1.8bn so far

The Government has raised more than half a billion euro from the sale of shares in Bank of Ireland on the stock market since last June, according to Minister for Finance Paschal Donohoe, as he confirmed that the drip-feed sale of shares will continue.

This brings to €6.5 billion the amount received by the Irish State on foot of its €4.7 billion crisis-era bailout. That figure includes the repayment of bailout bonds, share sales, dividends, coupons and guarantee fees.

The Minister has reduced the State’s holding from 13.9 per cent last summer to less than 5 per cent today through two phases of share selling, raised €532 million. The Minister said a third share sale process will now set to stretch to October 18th, when the current stage concludes in later May.

Analysts and Bank of Ireland chief executive Francesca McDonagh have previously said that they expect the lender to return to full private ownership next year, making it the first among the State’s three surviving bailed-out banks to do so.

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The average price achieved in the initial phase of selling last year, in which €249 million was raised, was €4.96 per share. That average price has risen to €5.64 per share in the second phase, raising €283 million.

“The share trading plan, which slowly sells our shares into the market, has enabled us to benefit from the gradual rise in Bank of Ireland’s share price since last summer and I believe it is in our best interest to extend the plan for a further period,” Mr Donohoe said.

Share buyback

"We had previously speculated about a potential extension of the trading plan or a placing of the government's residual shareholding (of circa 3 per cent, on our estimates) come the end of the trading plan in May and the extension announced today now facilitates a full exit from the State's investment in BIRG [Bank of Ireland Group] by October," said John Cronin, an analyst with Goodbody Stockbrokers.

Bank of Ireland said on Wednesday that it will buy back up to €50 million of its shares over the next seven weeks in its first stock repurchase programme since 2004, before the financial crash. Share buying began on the day of the announcement.

"The Minister reiterates the Government's objective of returning the banks to private ownership in this morning's announcement and this comment, together with the announced extension, will undoubtedly lead to speculation around what the State might elect to do with its AIB shareholding next," Mr Cronin said.

AIB said last month that it was in talks to buy back some €91 million of the State’s shares in the bank as part of a plan to hand over €213 million to shareholders though dividends and stock repurchases.

The Government, left with a 71 per cent stake after AIB’s initial public offering (IPO) in 2017, started to sell down some of its remaining shares in January in a drip-feeding exercise that was on track to reduce its holding to about 68-69 per cent by the middle of the year, according to analysts.

A buyback of €91 million of shares would reduce holding by a further 1.4 per cent, based on AIB’s current share market value.