Saturday 18 August 2018

AIB restructure 'won't alter traded share price'

AIB chief Bernard Byrne. Photo: Collins Photo Agency
AIB chief Bernard Byrne. Photo: Collins Photo Agency

Gretchen Friemann

The overhaul to AIB's corporate structure will not result in any change to the share price, according to analysts.

The partly-nationalised lender will hold an extraordinary general meeting (EGM) next month to establish a separate holding company which will have distributable reserves of €5bn.

A prospectus relating to the scheme will be published next Tuesday, but shareholders are being told the changes are technical and won't impact their real holding in the bank.

The move is part of an EU-wide regulatory change intended to shield taxpayers and depositors from another banking collapse.

This newspaper reported at the time of AIB's IPO in June that it would follow in Bank of Ireland and establish a holdco structure by the end of the year.

Yesterday, AIB got High Court approval to hold the EGM on November 3, with shares in the new holdco expected to commence trading on December 11.

The corporate restructuring, handled by Goodbody Stockbrokers and Morgan Stanley, will be simpler than Bank of Ireland's in April, which also included swapping old shares for a smaller number of new stock - a so-called reverse split.

That resulted in a dramatic, albeit technical, alteration in the share price, which started trading under the new structure at €7.38 each compared to the previous 24.60 cents.

AIB's deal will alter the nominal or face value of the shares for internal purposes, reducing the nominal value from €2.47 to €0.625 each, but Owen Callan of Investec said shareholders will see no difference in the traded price.

For AIB shareholders the changes will not reduce or increase the number of shares they own, or their real stake in the bank.

The corporate restructurings, are designed to comply with the incoming European MREL standards but the reforms are relatively costly.

Bank of Ireland spent over €10m on fees to complete its overhaul.

AIB's egm follows its IPO in June which delivered €3.4bn into the State coffers by reducing the Government's holding in the bank by 28.8pc.

The lender paid out €41m in fees for that deal, including €10m to €12m funneled to financial advisers.

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