Ireland to sell part of its 71% stake in €6bn AIB

Ireland’s Minister for Finance Paschal Donohoe has announced his intention to sell part of the Irish State’s 71.12% directed shareholding in AIB Group Plc over the next six months.

The state’s sale of its shares in the bank, which has a current stock market value of about €6 billion, will begin in mid-January.

The sale will be carried out through a pre-arranged trading plan that will be managed by Merrill Lynch International-BofA Securities.

Donohoe said: “With our share trading programme proving successful in reducing our stake in Bank of Ireland, I am now announcing the restart of our phased exit from the State’s larger investment in AIB.

“The bank’s financial performance has improved significantly while investor appetite for banks is also recovering, so these conditions provide a supportive environment to reduce our shareholding in the bank over time.

“Given the thinner liquidity in AIB shares, I expect the pace of share sales to be slower than what we’ve seen at Bank of Ireland, but it is important that we make further progress on what will be a multi-year journey.”

AIB was bailed out for almost €21 billion between 2010 and 2011.

AIB Group CEO Colin Hunt said: “We welcome this decision by the Minister for Finance, Mr Paschal Donohoe TD, that will lead to a further divestment of the state’s shareholding in AIB Group plc.

“It is an important development in the process of returning the state’s investment in the Group.

“AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis.

“The group’s robust balance sheet, its digital capability and the scale of its operations means it will continue to play a key role in supporting the Irish economy and our customers.

“The focus of our strategy is to grow and strengthen the group to ensure we continue generating sustainable returns for all our shareholders.”

The Department of Finance said: “BofA Securities was appointed to the role from the Department of Finance’s Panel of Financial Advisors following a mini-tender competition.

“Under the trading plan, BofA Securities has been mandated to effect a measured and orderly sell down of shares in the company on behalf of the Minister.

“The Minister has instructed BofA Securities to target a sale of up to, but no more than, 15% of the expected aggregate total trading volume in shares of the company over the duration of the trading plan.

“The number of shares to be sold will depend on market conditions, amongst other factors.

“In order to ensure that the taxpayers’ interest is protected, shares will not be sold below a certain price per share, which the Department of Finance will keep under review.

“The trading plan will become operational in mid-January and will terminate no later than six months thereafter, but can be renewed at the Minister’s discretion.

“The decision to launch the trading plan does not preclude the Minister from executing other transactions in the State’s directed shareholding in the company, that achieve value for money for taxpayers, including during the term of the trading plan.

“As such, the Minister will keep other sale options open, including accelerated bookbuilds or directed buybacks should these opportunities present themselves.”

The Department of Finance is being advised by N.M. Rothschild & Sons Limited and William Fry LLP.