It’s taken a decade and a half, but it really does look like the State may finally be removed from the share register of AIB before the end of this year.
Minister for Finance Paschal Donohoe has agreed in principal to the bank’s plan to buy about €1.2 billion worth of shares back from the Government. Assuming shareholders approve the plan at AIB’s AGM in May and markets are relatively calm, the buyback is expected to happen shortly after.
While shareholder approval is more or less a foregone conclusion, favourable conditions are less certain given how United States president Donald Trump is roiling markets. Still, it seems likely that the buyback will happen and the State’s holding will be cut to about 3 per cent.
We’re a long way from the 71 per cent the government held in AIB after the various bailouts and recapitalisation programmes during the financial crisis. This is no bad thing. For years, the bank – along with Permanent TSB and Bank of Ireland – had been caught between two stools as far as investors were concerned.
While the government was largely hands off in its role as majority shareholder (and let’s not kid ourselves, the saviour) of the big banks here, there were still plenty of images of bank CEOs being called in by the minister to discuss various matters, often the political hot button issue of the day.
That was seen to cause some discomfort among investors, who chafed at even the possibility of State interference in AIB and the others. In short, was AIB a State entity or a private enterprise?
That issue is essentially off the table now and will likely be formally gone by the end of the summer. At 3 per cent, it won’t take long for the Government’s holding after the buyback to be sold off.
After more than 15 years, billions of euros in costs to tax payers and the near total destruction of the economy, AIB will likely be back in fully private hands.
