Government to keep an AIB stake, says CEO
Published 20/02/2013 | 04:00
THE Government is likely to remain a long-term shareholder in bailed-out AIB even if new investors end up with a majority stake, according to the head of the bank.
Chief executive David Duffy hopes to sell a stake in the nationalised bank to private investors next year, he said in an interview with the Bloomberg newswire.
However, the bank chief refused to speculate on how much of the €21bn bailout that the Government poured into AIB will be recovered.
Mr Duffy said: "Today, we're sitting in a place where a lot of money went into it, but if we can follow the path we're on successfully, money will be coming back. What amount finally gets paid back, who knows?''
The Government is unlikely to exit its stake completely, even if a stake in the bank is sold or if the European bailout fund becomes the bank's main shareholder, he said.
"I think the Government should and would always be involved in the bank at some percentage and there's certainly a long-term equity upside in that equation," he said.
Mr Duffy took the reigns at AIB in late 2011 after spending most of his career abroad.
He said the bank would try to attract long-term, stable investors as owners, even if attracting that profile of buyer takes time.
Mr Duffy explained: "The first principle is that we would not really look at venture capitalist or short-term (investors). If we had to wait even longer, we'd wait to have long-term, stable investors."
Attracting investment is set to get under way in earnest next year, four years after the bank had to be rescued at a cost of €21bn to the State.
"We've deliberately chosen a strategy to make us an investible proposition in 2014," Mr Duffy said.
"We will make ourselves as attractive as possible from a commercial perspective, with the most attractive dividend or yield in future, and then the Government will take its decision at the right time.''
Private investment in the bank will be targeted, even if the Government can pass some of its current 99pc stake in the bank to the European Stability Mechanism (ESM).
"Even if you do a transaction with the ESM, then having private investors come in and eventually taking the ESM out would be appropriate," said Mr Duffy.
"If it turns out that it's straight back to market, great. That's a function of getting the money back. If it turned out that if it was through the ESM, followed by a migration to private ownership, or a hybrid of ESM and private for a while, we're very relaxed."
One key measure that will be looked at by any investor is the bank's so called net interest margin (NIM) – the difference between the cost of money for the bank and the price it charges to lend to customers.
AIB's NIM income is improving, said Mr Duffy, commenting: "I think will be pretty much the bottom of the NIM trend.''
He said the bank was now focused on NIM from a long-term sustainability perspective.
Shutting AIB in the way that the former Anglo Irish Bank has now been closed down would have been enormously damaging because of its role in the economy, he added.
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