Monday 20 November 2017

AIB chief urges Government to pull trigger on €3bn share sale

Allied Irish Banks chief executive Bernard Byrne. Photo: Mark Condren
Allied Irish Banks chief executive Bernard Byrne. Photo: Mark Condren

Gretchen Friemann

Allied Irish Bank chief executive Bernard Byrne urged the Government to pull the trigger and return the State-owned lender to the stock markets by summer rather than wait until the second half of the year to shed a near-€3bn stake in the bank.

Speaking after AIB's annual general meeting in Dublin yesterday, Mr Byrne argued that all the requirements for a successful initial public offering were there.

He said that while the decision to press ahead with the deal lay with Minister for Finance Michael Noonan, he stressed "our bias is to encourage something to happen" between mid-May and early July.

The Government has repeatedly outlined this period as the first window of opportunity to float AIB, with a second share sale option for some time in September and October.

But amid the widespread relief in global markets following the first round of the French Presidential election, conditions for a partial privatisation have rarely looked so supportive.

According to Mr Byrne, "if you look at the things necessary to get an IPO away - an attractive equity market, business performing pretty well, the Irish economy performing well and the intention politically to get it done - they're all there. So right now they all align."

Yet even as Mr Byrne polishes his pitches to new investors - the bank's management have met with close to 100 potential institutional shareholders over the past few months as part of an international non-deal roadshow - the bank continues to come under fire for past failures.

Despite the small number of attendees at the AGM in the RDS concert hall, shareholders demanded an explanation for the latest fine slapped on the bank by the regulator.

Chairman Richard Pym characterised the failure to properly monitor accounts for money laundering and tax evasion as a "stain" on the bank.

But he insisted AIB was in a "much better place" and described the risk and audit committees as "extremely thorough".

He added that the bank had admitted the breach, "paid the fine and... put it right".

This week's clampdown from the Central Bank is unlikely to be the last with AIB bracing for the conclusion of the regulator's probe into the treatment of its tracker mortgage customers.

Mr Byrne said the harsher measures were now "part of the landscape" and pointed out the investigations are centred on historical failures. While the recent fine comes at an awkward time for AIB, as it prepares for an IPO, Mr Byrne emphasised the speed of the turnaround at the bank.

He noted that non-performing loans have fallen by €500m to €8.6bn and reiterated the bank's aim of reducing that to less than €3bn within three years.

New lending has also risen by 10pc in the past quarter compared to the same period last year.

Mr Byrne pointed out the bank has now "normalised" after notching up two consecutive years of pre-tax profit at the same time as it "has been paying back money to the State".

Taxpayers pumped €20.8bn into AIB and so far it has returned over €6bn to the State.

Yet as the tougher regulatory regime starts to bite, the bank's impaired loans remain its greatest challenge.

Mr Byrne refused to confirm whether a strategy has been adopted to tackle the non-performing loans but pointed to more portfolio sales along the lines of the recent sale of non-performing buy-to-let mortgages to Goldman Sachs.

"That is going to be part of the strategy," he said, but argued that these measures were necessary only "if the customer was not engaging".

Irish Independent

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business