According to information provided to Michael McGrath, the former Minister for Finance, officials have stated that a subsequent sell-off of the state’s shares would not necessitate a reassessment of the salary limit for senior personnel. Ministry authorities also expressed to the minister that the period for disposing of bank shares in the summer was rapidly approaching its end, ahead of the most recent cut of the state’s ownership within the lending institution, which realised €593 million for the Treasury.
In financial department documentation submitted on the 25th of June, personnel indicated that should an alternative disposal of AIB shares be pursued, a judgement would need to be reached within a seven-day window. The officials added that if postponed, a transaction could not proceed until the early days of August, which was not the optimal timing owing to the month traditionally being slow for business transactions of greater magnitude. The suggestion was also mooted that delaying until September might lead to a scheduling conflict with the Budget.
“Entering into Budget period elevates the risk of acquiring market-sensitive details which may obstruct trading,” they cautioned. The report pontificated a potential financial gain of €610 million based on concurrent share values, and that this could reduce the State’s minority stake in the bank to a figure of 25.6 per cent.
“As AIB is currently outshining other European bank stocks this year, our opinion is that we should capitalise on this favourable condition. Despite a temporary dip in AIB’s share value (and European banking shares on the whole) following recent European elections and the unexpected election announcement in France, AIB’s share value rebounded substantially,” the briefing explained.
The submission also laid out how the State’s percentage of ownership within AIB was fast decreasing towards the 25 per cent mark, the point at which the minister would not retain the veto right on privileged resolutions. Nevertheless, “there isn’t a legislative obligation to modify or remove the salary cap at any stage as the state’s minority stake within AIB dwindles. An additional equity disposal is feasible without the need for a salary discussion debate.”
Minister Michael McGrath gave his approval for the share sell-off, stipulating that the earnings should be channelled into the Ireland Strategic Investment Fund (ISIF), pending a Government ruling concerning the utilisation of these funds.
Officials have reported that share sales have been conducted at a price of €4.90 each. This is a significant increase of 24.7 per cent in comparison to a similar sale that occurred in November 2023. As per the report, it’s believed that this is the most the market could bear without losing orders from key ‘long-only’ investors.
The state has managed to retrieve €16.1 billion from the initial €20.8 billion investment in AIB, as a consequence of the financial crash. The report signifies that the current remaining 25.5 per cent share in AIB is valued at approximately €3.1 billion. In contrast, at the commencement of 2022, the state held a 71.1 per cent share which was then valued at approximately €4.2 billion.
The officials also shed light on the fact that, of the €29.4 billion total fund injected into AIB, Bank of Ireland and Permanent TSB by the exchequer, the state has managed to retrieve €25.6 billion. According to officials, the differential between the expenditure and recovery, along with the remaining holdings, is about €270 million.
The announcement clarified that the state no longer holds shares in Bank of Ireland and while the state still has a 25.5 per cent share in AIB, this is being systematically decreased through prudent management. When officials from the Department of Finance were questioned about the records, a representative announced that there was no additional information to offer at present.