Lenihan statement

Statement by Minister for Finance on the EGM of AIB

Statement by Minister for Finance on the EGM of AIB

The Minister for Finance, Mr Brian Lenihan, TD, today welcomed the vote of the Extraordinary General Meeting of Allied Irish Bank where the Ordinary Shareholders passed all the resolutions required for the Government’s planned recapitalisation of the bank to proceed:

“This recapitalisation is a key step in the Government’s measured approach to the unprecedented turbulence in the financial markets. The investment, which will strengthen the bank’s capital ratios and facilitate the bank meeting its commitment under the terms of the recapitalisation to grow lending to small- and medium-sized enterprises and mortgage holders, is essential for the health of the Irish economy as a whole.

It is also consistent with the Government’s overall approach to the financial crisis, which has at all times been guided by the twin high level principles of protecting depositors and creditors and the interests of taxpayers. The recapitalisation is therefore in all our interests”.

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The Minister stated that in keeping with the principle of protecting the interests of the taxpayer, this investment will generate a significant return for the State.

It includes conditions that the Bank will pay interest of 8 per cent on the preference shares, amounting to about €280 million per annum.

The preference shares also have warrants attached giving the State an option to buy shares in 5 years’ time at a predetermined price, thereby offering the taxpayer the possibility of a significant return.

On foot of the terms of the recapitalisation, the Minister has the right to name four non-executive directors. The Minister confirmed the appointment of the two public interest directors, Dick Spring and Declan Collier, today and will be naming two further directors shortly.

The Minister notes that the chairman, chief executive and director of finance will be resigning over the next few months and expects to be consulted on their replacements. He supports these developments as part of the ordered change in the board membership over a sensible but not overly-protracted period of time.