AIB shareholders vote in favour of new corporate structure

Proposal designed to protect savers but allow for bailing in of bondholders in a crisis

Activist Margaretta D’Arcy is escorted from the platform during the AIB EGM after inviting board members to report themselves to the Garda for their conduct in the tracker mortgage scandal. Photograph: Brenda Fitzsimons

Activist Margaretta D’Arcy is escorted from the platform during the AIB EGM after inviting board members to report themselves to the Garda for their conduct in the tracker mortgage scandal. Photograph: Brenda Fitzsimons

 

Shareholders in AIB have voted overwhelmingly in favour of a restructuring of the bank aimed at meeting new European rules on minimising future taxpayer bailouts.

The bank, which cost €20.8 billion to rescue during the financial crisis, sought shareholder approval for the scheme at an extraordinary general meeting in Ballsbridge, Dublin, on Friday.

The AIB board had unanimously recommended that shareholders vote in favour of the resolutions.

The bank said in February, along with Bank of Ireland, that it would set up a holding company at the top of its corporate structure, designed to give taxpayers and depositors maximum protection in the event of another crisis.

Now that shareholder approval has been obtained, the bank will move to seek High Court approval for the setting up of the new holding company, which will be called AIB Group.

This entity would issue senior and junior debt that could be “bailed in” if needed, before State support would be called upon. Deposits, however, would be held in the existing operating banks, where they would enjoy greater protection.

Irish banks inflicted €15 billion losses on junior bondholders as taxpayers picked up a gross €64 billion rescue tab between 2009 and 2011.

However, senior bondholders were protected because of opposition from the European Central Bank and the fact there was no legal framework to “burn” them without also hitting depositors.

‘Top company’

AIB chairman Richard Pym told shareholders that the new holding company would be “the top company in the group and the company you will hold shares in”.

“We will be asking the High Court to sanction the new structure,” he said. “The court will want to see that the shareholders approve the new structure.”

AIB group general counsel Helen Dooley said the proposals would provide for “sufficiently early and quick intervention” by regulators in order to “mitigate the effect of a failing bank”.

“The rationale is to protect depositors,” she said. “It will improve financial stability for depositors and bank customers.”

Earlier, the start of the meeting was briefly interrupted by activist Margaretta D’Arcy, who told shareholders she was carrying out a “citizen’s arrest” of the AIB board due to the tracker mortgage scandal.

“You are charged with colluding with other banks and operating as a cartel in order to rip off the Irish people,” she said. “The impact of your crimes have led to enormous psychological damage to your victims.

“You have wrecked the stability of communities all for the sake of enhanced profits. Your crimes are a flagrant and arrogant breach of the preamble to the Constitution.”

After Ms D’Arcy spoke, Mr Pym said AIB had commenced an investigation into the tracker mortgage issue in August 2015.

“We’ve had 500 people dedicated to the programme since then,” he said. “They have examined 650,000 mortgages in detail.

“I know many people have a lot of questions on it and a lot of valid emotion, but we won’t be commenting further other than to say we remain committed to investigating the matter under the Central Bank’s guidelines.”