Tuesday 24 April 2018

AIB bailout loans could be converted to shares and offered to public in IPO

Bank still considering a cut to variable interest rates

Donal O'Donovan

Donal O'Donovan

A possible conversion a €3.5bn State bailout loan into ordinary shares in AIB is under discussion as part of a move to overhaul the bank's capital structure ahead of a possible sale to the public.

Talks are underway between the Government and AIB on an appropriate capital structure for the bank.

They are focused on options in relation to the €3.5bn of so called preference shares, a type of loan, including possibly converting some or all of the debt into bank shares, AIB chairman Richard Pym said.

Mr Pym said the bank is still considering a cut in the interest rate charged on standard variable rate home loans, though gave no further insight into when that could happen. Last week AIB chief executive David Duffy indicated a rate cut could happen by the middle of the year.

Richard Pym said AIB was the first bank to reduce standard variable rates at the end of last year.

In relation to mortgages arrears Mr Pym told shareholders that AIB loses money on repossessions.

The rate of arrears on Irish home loans declined 22pc at the bank last year, he said.

However, he said the bank cannot spend shareholder and taxpayers' money where customers won't cooperate.

Speaking at the bank's annual general meeting at its headquarters in Ballsbridge in Dublin, he said talks are also focused on €1.6bn of contingent capital notes, a separate debt owed to taxpayers, and consolidation of the bank's massive half a trillion of existing shares.

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