Value of State’s shareholding in AIB fell €900m last year

The value of the State's holding in AIB reduced by €900 million last year, according to a valuation carried out for the Ireland Strategic Investment Fund (ISIF) by accounting firm EY.

Taxpayers own 99.9 per cent of AIB, and this holding was valued at €11.3 billion at December 31st, 2016, down from €12.2 billion a year earlier.

This reflected a reduction during the year in the value of European bank stocks on global markets, and followed a desktop exercise by EY.

Based on this valuation, a stock market flotation of 25 per cent of AIB by the Government this year would yield €2.8 billion. However, this is not seen as a reliable yardstick given that bank stocks have recovered some lost ground since the beginning of this year and the final price of AIB shares will ultimately be determined by investor appetite and demand for the stock.

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ISIF valued the State's near 14 per cent holding in Bank of Ireland at €1.1 billion at the end of last year, down from €1.5 billion a year earlier.

In total, the value of the Government’s holdings in both banks declined 9.9 per cent last year, according to an update published by ISIF on Monday.

Ordinary shares

Since 2009, ISIF (through its predecessor the National Pensions Reserve Fund) has invested €20.7 billion in preference and ordinary shares in the two banks. This comprised €4.7 billion in Bank of Ireland and €16 billion in AIB.

To date it has received €6.4 billion in cash from the banks by way of preference share dividends, the redemption of these shares, and the sale of ordinary shares to private investors. Some €4.2 billion has been received from Bank of Ireland and €2.2 billion from AIB.

The value of ISIF’s discretionary portfolio, which is invested in a range of bonds, cash, and alternative assets, increased last year by 2.9 per cent to €8.1 billion.