The Allied Irish Banks (AIB) and Permanent TSB (PTSB) banks are intending to purchase back shares from multiple small-scale shareholders, a plan which comes after their assets were largely diluted following the banking crisis bailouts. These intentions are to be proposed at their forthcoming annual general meetings, with a view to initiate ‘odd-lot’ offers.
AIB is keen to buy back shares from individuals owning 20 or fewer. These people comprise nearly 90% of the bank’s 75,000 shareholders in numbers, but only possess 0.01% of the total shares in the bank. To execute this plan, the bank will have to spend just over €100 for purchasing 20 shares, this will include a 5% premium as an incentivisation strategy. Those holding the stock – frequently, the heirs of deceased investors – would find that brokering fees nullify any profits from selling their shares on the open market.
Before the bank’s significant share consolidation undertaken in 2015, just 20 AIB shares – equalling 5,000 shares then – would have been valued around €120,000 in 2007, at the apex of AIB’s share value. Naturally, those legacy shareholders faced a wipe out over ten years past when the bank was rescued by the government. But participating in this buy-back could definitely settle these losses, and might even be utilised to balance out investment profits elsewhere for tax purposes.
Accordingly, PTSB – another bank that required a crisis-era taxpayer bailout – is strategising to eliminate approximately 128,000 shareholders from its register, with plans to offer buyouts to holders of 100 or fewer shares. These shareholders make up 99.5% of its investor population, but have an aggregate representation of less than 0.12% of all the bank’s shares.
However, current rates (including the 5% premium) would see holders of 100 shares receipt around €165. Worth noting, in previous years, this equivalent would have been 10,000 shares prior to the bank’s share swap which occurred about ten years hence, where each 100 shares were exchange for one new share. PTSB’s shares – previously known as Irish Life & Permanent – reached their highest at €22.45 in February, 2007. Today’s equivalent of 100 shares would have been worth a substantial €224,500 seventeen years ago.