Business Irish

Monday 22 September 2014

Taxpayer 'will get AIB money back', chairman insists

Donal O'Donovan and Colm Kelpie

Published 20/06/2014 | 02:30

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AIB Directors, Dick Spring and Michael Somers at the AIB AGM
AIB Directors, Dick Spring and Michael Somers at the AIB AGM

Taxpayers will not lose money on the €20.8bn state rescue of AIB, the bank's chairman has insisted.

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The cost of the bank's bailout will eventually be repaid and significant amounts could potentially begin returning to taxpayers in the next few years, chairman David Hodgkinson said.

"This bank will, over time, repay the €20bn to the state. That is our intention," Mr Hodgkinson, below, said.

"(It is) definitely a realist prospect – I think we can make substantial repayments in the years to come," he said.

He was speaking at the bank's annual general meeting (AGM) in Dublin.

The comments were echoed in Luxembourg by the Minister for Finance Michael Noonan.

"It's very hard to put a timeframe on it but I'd be fairly confident now that, if we're patient, there is a big return to the taxpayer,'' Minister Noonan said.

Mr Noonan said AIB has been valued by the National Pension Reserve Fund at €11bn.

"That was the figure last year. What's owed to the taxpayer... was a little bit north of €20bn. So the value is halfway there and over time it should grow.

"We're in no rush," the minister added.

Back in Dublin shareholders heard that chief executi ve David Duffy has signed a permanent contract to stay on as head of the bank.

The bank's most senior executive had been on a three-year contract due to end this year, the AGM was told.

Mr Duffy said his €425,000 a year pay will not change under the new contract. The chief executive said his contract entitles him to the maximum €500,000 allowed under the state pay cap, but he has taken a voluntary 15pc cut on that.

The effectively nationalised lender held a sparsely-attended AGM and an extraordinary general meeting (EGM) immediately afterwards at its headquarters in Dublin.

Lending drawdowns by AIB customers were 60pc higher in the first three months of the year, compared to 2013, the chairman said.

The bank's priorities for customers in financial distress are to keep "private dwelling mortgage customers in their homes where possible", to secure the future of "viable companies" and to deal with all cases fairly, the chairman said.

He added that the bank has paid more than €2bn to the State in fees and interest on rescue loans since the crash.

Shareholders were balloted yesterday on the reappointment of directors and on a share consolidation scheme that will see the number of outstanding shares slashed to a quarter of the 523 billion now in circulation as part of a simplification of its capital structure.

The bank is more than 99pc state owned meaning there was no prospect of small shareholders causing any upset at the votes.

The planned share consolidation will have to be approved by the High Court.

Irish Independent

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