AIB sale will probably take place in May or June, Noonan says

Minister for Finance Michael Noonan has signalled greater optimism that the State's long-awaited sale of a 25 per cent stake in AIB will take place in the first half of this year.

"We're set to organise an IPO [initial public offering] probably in May or June for AIB," Mr Noonan told reporters in Brussels on Thursday.

Last week, the Minister said in the Dáil in response to a parliamentary question that May or June would provide the first opportunity this year to begin the sell-down of the Government’s 99.8 per cent stake in AIB, with the autumn providing another possible “window” of opportunity.

A spokesman for the department said that while the Minister may be more hopeful that a share sale can take place in the first half of the year, the official position hasn’t changed in the past week and that there there were plenty of opportunities for to maximise value for taxpayers.

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The State has recouped about €3.4 billion in the past 15 months of its €20.8 billion bailout between 2009 and 2011 of the country's second-largest bank by assets. The Ireland Strategic Investment Fund, which holds the shares on behalf of taxpayers, valued the 99.8 per cent holding at €12.2 billion at the end of September.

Banking stocks have rallied following the election of US president Donald Trump in November, as speculation around his spending plans has stoked inflation and inflation expectations as well as bond prices, which help financial companies' earnings. AIB's closest rival, Bank of Ireland, has seen its share price jump by more than two thirds from its low point last August. It has added 16.4 per cent since the US vote on November 8th.

Restricted pay

Analysts at Goodbody Stockbrokers, which is a company broker to AIB, estimate the bank will be in a position to pay a €285 million dividend to the State after it posts full-year 2016 figures in early March.

Meanwhile, Mr Noonan said in response this week to another parliamentary question that the Government has “no plans to deviate” from its current policy of restricted pay at bailed-out banks.

Former AIB chief executive David Duffy said in an interview with The Irish Times in August that would-be investors in the AIB share sale will want to see top management on a long-term incentive plan that aligns their interests with shareholders.

AIB chief executive Bernard Byrne’s basic salary in 2015 was €479,000, inside the Government-imposed €500,000 pay cap, though when pension contributions and other taxable benefits were included, it rose €96,000.

Jeremy Masding, chief executive of 75 per cent State-owned Permanent TSB, said last month that there needed to be a "mature debate" in Ireland about pay for senior executives. Mr Masding, who is on a €400,000 annual salary, said there should be three elements to executive pay: a benchmarked salary, "controlled" bonus, and long-term incentive plan.

Mr Noonan confirmed that he had met the chairman of one bank, known to be Bank of Ireland's Archie Kane, where the issue of the current compensation restrictions for banks was discussed. Bank of Ireland chief executive Richie Boucher is the only exception to the existing salary caps. His remuneration came to €961,000 in 2015.

“I can also confirm that I recently met with senior representatives of the other banks in which the State has a shareholding as part of the same round of meetings at which, again, a broad range of topics was discussed,” Mr Noonan said.

“Remuneration was not on the agenda for these meetings.”