Tuesday 21 November 2017

Expert team to oversee changes at AIB

Emmet Oliver Deputy Business Editor

The National Treasury Management Agency (NTMA) has sent a team of leading advisers into AIB to help the bank get through a series of challenges as it heads towards effective nationalisation.

The experts from PricewaterhouseCoopers (PwC) were being appointed to the bank to support the existing management and to deal with a series of business issues, said a NTMA spokesman yesterday.

He denied speculation the team would effectively be running the bank or replacing managing director Colm Doherty and chairman Dan O'Connor, who were due to step down within months.

PwC has had a significant role in the banking crisis by assessing the loan books of several banks on behalf the State.

The PwC team will be small, maybe up to three people, and reflects the level of contact going on between the NTMA and AIB. Last week, the Finance Minister Brian Lenihan admitted the State would effectively end up owning 90pc of the lender, although it will retain its stock exchange listing.

Capital

The bank is due to raise €10.4bn in fresh capital, and has only released €2.5bn so far through the sale of its Polish operations. Next up is the sale of its stake in US lender M&T, with the disposal of its British assets to take place next year.

The Government is going to underwrite a share placing and rights issue that few people expect to be successful, forcing it, in effect, to take over the bank, Ireland's second largest.

The Government already has €3.5bn of preference shares in the bank and can convert these to ordinary shares. This means the State is no longer guaranteed a dividend payout, but it can sell its holding back into the market in a few years' time, ideally recouping its investment.

Last week, the markets were shocked to hear AIB needed €3bn of extra capital after the Financial Regulator carried out a Prudential Capital Assessment Review. Higher-than-expected discounts on AIB loans by NAMA was the chief reason.

Irish Independent

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