Wednesday 21 March 2018

AIB rights issue to launch against hostile backdrop

Laura Noonan

Laura Noonan

AIB has warned that it may have to launch a rights issue in "difficult economic and market conditions" so it can meet the Financial Regulator's year-end capital targets.

The warning is contained in a 170-page document drawn up to formally admit the National Pension Reserve Fund's bonus shares into the official listing.

The prospectus, drawn up on September 9, references a litany of "risk" factors typically found in all similar documents by banks across the globe.

The AIB-specific risks identified include the potentially hostile backdrop to the bank's upcoming equity raise as it battles to boost its capital position by €7.4bn ahead of year-end.

Noting that the equity raise will "fulfil the remaining capital requirement" after AIB has sold off its non-core assets, the bank says its intention is to carry out an issue "under-written either by international banks or the Government".

"A capital raising may be undertaken in difficult economic conditions or conditions which are unfavourable to the AIB Group, and there is no assurance that the AIB Group will be able to raise the required remaining regulatory capital from existing or new investors," the bank notes.

The prospectus adds that the "structure, timing and terms of that equity capital raising will be considered further" by the bank and the Government.

Since the prospectus was drawn up, AIB has secured a €2.5bn capital uplift from the sale of its Polish operations and is reportedly on the cusp of securing another €1.2bn from selling its stake in US bank M&T.

The bank is also hoping to raise a further €1bn from selling its UK assets, leaving it with about €2.7bn to raise from equity markets.

Irish Independent

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