Business Irish

Sunday 25 February 2018

AIB burns junior bondholders in buyback, saving taxpayer €1.6bn


Charlie Weston, Personal Finance Editor

AIB SAID yesterday that it has saved the taxpayer approximately €1.6bn after it partially burned its junior bondholders.

Minister for Finance Michael Noonan last night welcomed the announcement from AIB that it expects to generate at least €1.6bn from the buyback of junior bonds.

The bank said 86pc of the notes covered by the offer were tendered in preliminary results.

In a statement, the minister said the completion of the first phase of the burden-sharing exercises will reduce the core tier 1 capital requirement of AIB from the State by approximately €1.6bn.

It is anticipated that the level of core tier 1 capital required from the State will reduce further following the second phase of the liability management exercises, which completes in July, the minister said.

"It is government policy to achieve appropriate burden-sharing from holders of bank subordinated debt, not only in AIB but also in Bank of Ireland, EBS Building Society and Irish Life & Permanent, where liability management exercises are all under way," he said.

Preliminary results of the bank's plans to enforce a burden-sharing plan on its subordinated bondholders -- which was approved by the High Court last Thursday -- show that 86pc of junior bondholders have accepted the bank's offer to buy back their bonds at a significant discount.

This means the bank has created €1.6bn of capital, reducing the public's bill for keeping AIB afloat.

Irish Independent

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