The State may sell its remaining AIB shares next year, according to the bank’s chief executive, even though taxpayers are not currently on track to recoup all of their €20.8 billion bailout investment.
“It is within the bounds of possibility that we’ll see the Irish Government exiting the share register in calendar ‘25,” Colin Hunt said in an interview with Bloomberg TV in London on Wednesday, noting the pace at which the State has been selling down its holding in recent years.
“My job is to ensure, along with my colleagues, that there is a strong investor proposition in the market for when the Government decides to transact.”
Mr Hunt welcomed Minister for Finance Jack Chambers’s announcement earlier this month in his Budget 2025 speech that €3 billion raised this year from the sale of AIB shares will be earmarked for infrastructure and development in the areas of water, housing and energy.
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The Government has reduced its AIB holding from 71 per cent at the start of 2022 to just under 21 per cent currently through a three-pronged approach of drip-feeding shares into the market; placing 5 per cent blocks of stock twice a year and participating in large, targeted share buy-backs by the bank.
The State has recovered about €16.7 billion of AIB’s crisis-era bailout – when dividends, interest on bailout bonds and bank guarantee fees are included. Its remaining stake is worth €2.44 billion, meaning taxpayers remain €1.66 billion under water on their rescue investment in the lender.
The average share price target for AIB among analysts points to about 20 per cent upside for the stock over the next 12 months. Even allowing for the full benefit of this, it would leave AIB more than €1 billion shy on repaying its bailout bill.
Mr Hunt’s comments coincide with a flurry of activity by European governments to sell down crisis-era bank stakes, taking advantage of strong sector valuations amid heightened interest rates.
Earlier this month, Greece concluded the reprivatisation of its lenders with the sale of a 10 per cent stake in National Bank of Greece.
The Dutch government announced plans on Tuesday to reduce its stake in lender ABN Amro to about 30 per cent from over 40 per cent.
The UK cut its stake in NatWest below 20 per cent during the summer, moving it closer to full private ownership after its 2008 rescue.
Meanwhile, the German government moved last month to sell a stake in Commerzbank, only to see Italian banking giant UniCredit buy part of the holding in a surprise move that increased its holding in the bank to 21 per cent. Officials in Belin are now working on ways to frustrate a possible move by UniCredit to take over Germany’s second-largest bank.
Mr Hunt said he is “not overly surprised” by how long it has taken European governments to sell down legacy bank stakes.
“The scale of damage done to the banking system during the great financial crisis was so great that it required a long period of time to correct,” he said, adding that AIB has lowered its non-performing loans and overhauled its balance sheet and business since it was rescued.
The Government sold its remaining shares in Bank of Ireland two years ago, leading to it recovering a total of €2 billion more from the lender than its €4.7 billion bailout to that bank.
Meanwhile, it has recovered €2.8 billion of PTSB’s €4 billion bill, almost half of which was generated by the sale of the bank’s former sister company Irish Life to Canada’s Great-West Lifeco more than a decade ago. The remaining 57.4 per cent taxpayer stake is currently worth €512 million, leaving a €688 million deficit on paper.
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