AIB could pay back its €21 billion in bailout funds within 10 years, its chief executive David Duffy told an Oireachtas committee on finance yesterday.
Mr Duffy said this was likely to be via the sale of equity in the bank and dividend payments to the State. In terms of selling a stake in the bank to private investors, he said it was likely there would be “a number of sales rather than one big bang”.
He said discussions with the Department of Finance, and the Central Bank in Dublin and the new Single Supervisory Mechanism in Frankfurt would give him clarity on an appropriate capital base for the bank: “It is only when that is clear and resolved that investors would be willing to make an investment.”
Back in profit
With AIB back in profit and generating capital again, Mr Duffy said it should be in an “investable proposition” for external investors by its full-year results next March. He said any stake sale and its timing would be a matter for the Government.
AIB told the committee that it might be able to pay the coupon on the State's €3.5 billion worth of preference shares for the first time next year. A payment of €280 million would fall due next May and chief financial officer Mark Bourke said the bank would discuss this with the department.
Mr Duffy reiterated the State would receive the bailout funds back in full. “It will take time but that would be our expectation,” he said. “Our simple mission in life is to return the entire value back to the taxpayer.”
He said the bank is valued at about €10 billion and his hope would be to double this figure within three years.
Ulster Bank
Earlier, Ulster Bank chief executive Jim Brown told the committee that some 68 per cent of all of its mortgages to first-time buyers this year would have fallen outside the new loan-to-value and income thresholds that the Central Bank of Ireland is planning to introduce from January 1st.
“The proposals, as they stand, will impact the ability of many first-time buyers to acquire their home,” the bank’s chief executive Jim Brown said.
“In addition, other hopeful first-time buyers will struggle to save a higher deposit while paying increasing rents,” he added.
The Central Bank has proposed that borrowers should be required to have a minimum deposit of 20 per cent, with some exceptions, to receive a home loan while lenders must also apply a 3.5 times loan-to-income ratio when considering applications. Its proposal is out to consultation until December 8th.
Mr Brown said Ulster Bank provides mortgages of up to 90 per cent while its loan-to-income thresholds are up to 4.5 times. Mr Brown said 85 per cent of its mortgages are at income levels of 3.5 times – within the new guidelines.
He said Ulster Bank expects to provide €500 million in mortgage lending this year.
