A further sale of State-held shares of AIB would not create the legal requirement to revisit the salary cap for senior staff, officials told former minister for finance Michael McGrath.
Department of Finance officials also told the minister that the window for a sale of shares in the bank this summer was closing quickly ahead of the latest reduction of the State’s stake in the lender, which yielded €593 million for the exchequer.
In a submission on June 25th, Department of Finance officials said if another AIB share disposal was to go ahead, a decision would need to be made within a week.
They said, if delayed, a sale could not take place until early August which was not ideal as it has “traditionally been a quiet month” for large-scale transactions. The submission said holding on until September could also end up clashing with the budget.
“This period runs into the budget so the risk of possessing price-sensitive information, which would prevent a trade, increases,” they warned.
The document said it was hoped that €610 million could be raised, based on share prices at the time, and that it would reduce the State’s stake in the bank to 25.6 per cent.
“Given AIB is one of the best-performing bank stocks in Europe this year, it is our view that we should continue to take advantage of this. While there was some share price weakness in AIB (and European banking stocks more generally) following the European elections and the calling of a snap election in France, we saw the AIB share price recover most of the ground it had lost,” it said.
The submission also explained how the State’s shareholding in AIB was getting close to the 25 per cent level, below which the Minister could no longer block special resolutions. Still, “there is no legal requirement to remove or alter the compensation cap at any point as the State’s shareholding in AIB reduces. A further share disposal can happen without visiting the topic of remuneration.”
Mr McGrath signed off on the share sale, saying the proceeds should be transferred to the Ireland Strategic Investment Fund (ISIF) pending a Government decision on what to do with the money.
In a post-sale submission, officials said the shares had been sold at a price of €4.90, which was 24.7 per cent higher than what had been achieved in a similar sale in November 2023. It said the price was “the highest we believed we could push investors” without losing some significant orders from “‘long-only’ investors”.
The State had now clawed back €16.1 billion from the €20.8 billion it invested in AIB during the financial crash, according to the report.
“Our remaining shareholding in AIB (25.5 per cent) is worth approximately €3.1 billion today. At the beginning of 2022 when our shareholding was 71.1 per cent it was worth approximately €4.2 billion.”
Officials said that overall, of the €29.4 billion the exchequer had pumped into AIB, Bank of Ireland and Permanent TSB, €25.6 billion had since been recovered. It said the gap between what the taxpayer had paid and what had come back, along with the remaining holdings, was now about €270 million.
“The State is no longer a shareholder in Bank of Ireland and our shareholding in AIB (25.5 per cent) is reducing in a prudent, sensible and well-managed manner.”
Asked about the records, a spokesman for the department said they had nothing further to add.
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