Buyer beware is always a good starting point for retail investors who are considering purchasing shares. Prices can go up as well as down, after all.

In Limerick yesterday, the Minister for Finance Michael Noonan's message in relation to those considering buying stock in AIB was even more blunt.

“The value attributed to the shares in the stock market at the moment would put a nominal value of €55 billion on AIB, it’s not worth that. So the shares are overvalued but it’s because of the restructuring.

“So I am issuing a kind of a warning to investors. Wait until it’s restructured before you buy. If you buy now you will lose money.”

AIB followed up his comments this morning with an stock exchange announcement noting that it trades on a valuation multiple of about six times (excluding the 2009 preference shares held by the State) its net asset value (NAV) at June 30th this year.

“AIB continues to note that the median for comparable European banks is about one time NAV,” the bank added.

In other words, AIB shares are overpriced. This all stems from its State bailouts. Between 2009 and 2011, AIB (including the EBS building society) received €20.8 billion in bailout funds from the State to save it from going bust.

This resulted in AIB issuing about 500 billion shares to the State, which now holds a 99.8 per cent stake in the bank. And gave it the artificial valuation that it now holds.

AIB has an extraordinary 523.4 billion ordinary shares in issue, which are listed on the junior ESM market in Dublin. But the free float – the number of shares that are available to trade each day – is just 0.2 per cent of its stock.

It is highly illiquid, making it potentially difficult for retail investors to close out their position.

Bank of Ireland was different. It remained out of majority State ownership and was able to attract in a group of international investors in 2011, including heavyweights like Wilbur Ross and Prem Watsa. Mr Ross has since cashed out with a handsome profit.

Bank of Ireland has also repaid the taxpayer-held contingent capital notes (CoCos) and refinanced the preference shares, to get the State pretty much out from under its skirt. The State’s residual holding in Bank of Ireland is now just 14 per cent.

AIB also has €1.6 billion worth of CoCos and €3.5 billion of preference shares owned by the State. These all form the so-called "capital stack"that AIB chief executive David Duffy keeps referencing when asked about when the bank might return to the capital markets now that it is back in profit and generating capital.

Mr Duffy told the Oireachtas finance committee last week that the bank would hold discussions with the department of finance and the European Central Bank before Christmas to bring some clarity to its capital base.

When that work is completed, a firm plan will be formulated to bring in some external investment, which Minister Noonan will then have to approve.

In a note to clients last week, Goodbody Stockbrokers stated its view that around €2 billion of its €3.5billion of preference shares would be converted into equity, facilitating a €1.5 billion sale to investors, probably next year. It said simplification of the capital structure should “rectify the share price anomaly”.

AIB is not worth €55 billion. That much is abundantly clear. Its return to private ownership will probably take some years. When pressed by the Oireachtas committee last week, Mr Duffy said it was his hope that the State would have its money back in full within 10 years.

So investors beware. AIB’s valuation will go down in the period ahead and it’s best not to be caught on the wrong side of the equation.