In a boost to the nation’s coffers, the UK government has amassed nearly €593 million from offloading an additional five per cent of its AIB equity stake. Consequently, its investment in the bank dips beneath the notable 30 per cent mark, registering at 25.5 per cent.
This activity raises the total funds recouped from the government’s €20.8 billion rescue package for AIB during the financial crisis to surpass €16 billion, based on information provided by AIB.
The cumulative amount garnered to date incorporates gains from 2017’s initial public offering, rescuing of bailout bonds, interest income, guarantee charges and dividends paid out. The residual stake, accounting for 25.5 per cent of the bank, has a value of €3.16 billion today. This implies a shortfall of €1.64 billion for taxpayers based on a cash in, cash out calculation.
The newly appointed Finance Minister, Jack Chambers, authenticated the placement on Thursday morning, further disclosing that shares were sold for €4.90 each. This figure represents a 2.7 per cent markdown from Wednesday’s closing valuation. Chambers has committed to a 90-day hiatus on further share sales.
From the start of 2022, the government has adopted a three-pronged strategy to decrease its equity in AIB: releasing limited shares into the market, occasionally positioning larger 5 per cent blocks, and participating in the bank’s stock buy-backs. At the onset of the sell-down strategy, the government’s holding was 71 per cent in January 2022.
AIB’s CEO, Colin Hunt, hailed the latest equity placement as another pivotal step towards repositioning the share register and appreciated the Irish taxpayers, acknowledging them for their support during the crisis period.
AIB’s stock has ascended 32 per cent over the trailing 12 months. The revision of expectations over ECB’s speed in slashing official borrowing charges has fostered a positive investor sentiment toward Irish banks this year, as their earnings are considerably more susceptible to interest rate alterations than their European counterparts.
As the year commenced, it was anticipated by the financial markets that there would be a rate reduction of 1.5 percentage points. Nevertheless, earlier this month, the European Central Bank carried out an initial reduction of a quarter-point, which caused its deposit rate to decrease to 3.75 per cent. Economists predict only two further reductions for the rest of the year. Previously, at the year’s outset, it was forecasted that there would be six reductions, each by a quarter-point rate.