State’s holding in AIB to fall to 53.4% after €215.3m share buyback

AIB said that it has agreed with Minister for Finance Michael McGrath to buy back €215.3 million worth of the Government’s shares in the bank, reducing its stake to 53.4 per cent.

The 54.7 million shares involved in the transaction, which is expected to settle on Wednesday, amount to about 2.05 per cent of AIB, the bank said in a statement.

The Government had a 71 per cent stake in AIB at the beginning of January 2022, when the Government started a programme of selling down stock through a combination of drip-feeding shares on to the market, the placing of large blocks of stock on to the market and participating in share buybacks.

“In 2022, AIB Group returned over €1 billion to the State and today’s agreement will generate a further €215m for the Irish taxpayer,” said the bank’s chief executive, Colin Hunt. “It is another positive development towards normalising our share register and enhancing shareholder value for all investors.”

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AIB had already said last month as it reported full-year earnings that it planned to spend €215 million buying back its own stock. In addition, AIB is planning to pay €166 million of cash dividends to all shareholders in the near future, which would generate a further €88.6 million for taxpayers, based off a 53.4 per cent stake.

Mr McGrath said that combined cash amounts will bring to about €12 billion the amount AIB has returned to the State since its €20.8 billion crisis-era bailout.

“After this transaction the State retains a shareholding in AIB of circa 53.4 per cent, currently worth approximately €5.5 billion,” the Minister said. “I will continue to monitor market conditions for further opportunities to reduce the State’s shareholding in AIB.”

It is widely anticipated that the Government will move to lift a €500,0000 executive pay cap at the bank when its holding falls below the 50 per cent level. Restrictions on basic pay were removed at Bank of Ireland last year when the State sold its remaining shares in the bank.

Although shares in AIB wobbled last month in line with the wider global banking sector, following the collapse of US lenders Silicon Valley Bank and Signature Bank and UBS’s Swiss-government backed rescue agreement to take over embattled rival Credit Suisse, they have since recovered and are up 88 per cent over the past 12 months as a whole.

Analysts at AIB’s Goodbody Stockbrokers unit said on Tuesday that they “would not be surprised to see another placing transaction in the relative near-term which would take the State’s shareholding in AIB below 50 per cent”.

“The Irish government has a stated ambition to reduce its holding in the Irish banking system. Having already achieved this in the case of Bank of Ireland, good progress has been achieved with its AIB shareholding,” said Davy analyst Diarmaid Sheridan.