State to offer AIB stock to small investors as part of any share sale

The Government plans to sell shares in AIB to small investors as well as institutions as part of its initial public offering of stock in the bank, which could happen as early as May or June of this year.

This has emerged following an update by the Minister for Finance Michael Noonan to the Cabinet on Tuesday.

The Irish Times has learned that a retail offering would require a minimum investment of €10,000. This would mirror the offer with Aer Lingus when it was floated on the stock market by the State in 2006.

The precise details of a retail offer have yet to be ironed out but it is likely they would be sold through various designated intermediaries or brokers.

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It is understood that the retail offering has been under consideration by the Department of Finance and its advisers for the past 18 months.

In a statement, the department said Mr Noonan had advised the Cabinet that his officials and advisers were “examining options” in relation to a potential retail offer that would provide individuals with the opportunity to participate in an IPO at the same price as institutions.

Potential retail investors would not be offered incentives to participate, it added.

Shares

Mr Noonan also told the Cabinet that any sale of shares would be within the parameters of the programme for a partnership Government, and would take the form of an IPO on the Irish and London stock exchanges, with 25 per cent of the bank’s shares offered to investors.

Mr Noonan said the key objective of such a deal would be to maximise the return for taxpayers, who bailed out the bank at a cost of €20.8 billion.

The Minister told the Cabinet that “substantial progress” has already been made with preparations for a potential transaction.

In December 2016, the department announced the appointment of Bank of America Merrill Lynch, Davy and Deutsche Bank as joint global co-ordinators to assist on a potential flotation.

Last Friday, the department also commenced a tender process to appoint bookrunners and co-lead managers to the selling syndicate. These appointments are expected to be made in the coming weeks.

Caveats

Fianna Fáil’s finance spokesman Michael McGrath welcomed the Government’s decision to offer AIB shares to small investors, with certain caveats.

“The possibility of a retail offer to members of the public as part of the planned AIB IPO is to be welcomed in principle,” he said.

“However, as with any decision to invest in shares, members of the public should do so with their eyes wide open and ensure they are fully informed of what they are buying into.

“As the main shareholder, the Government certainly shouldn’t get involved in encouraging people to buy shares as it is very much a personal decision for each person to make given their own attitude to risk.”

However, Sinn Féin's finance spokesman Pearse Doherty criticised the move. "Who benefits from this sale" he asked. "The bankers keen to drop the €500,000 salary cap will benefit, the speculators that wouldn't touch the bank for the last decade will benefit.

“It’s clear though that the Irish people will not benefit. They will be short-changed and lose the influence over the banking sector currently enjoyed. Floating the idea that some investors could buy into AIB smacks of a sop to hide the fact that the public will be the big losers here.”