New boss suggests State will have to take up most of €5.4bn rights issue
AIB'S new executive chairman yesterday all but ruled out private participation in the bank's upcoming €5.4bn rights issue, insisting investors would get better value on the open market.
The comments from ex-HSBC banker David Hodgkinson suggest AIB has accepted that the rights issue will be entirely financed by the Irish taxpayer, pushing the shareholding past 92pc.
Mr Hodgkinson stopped just short of telling investors not to take up rights at the EGM.
"I can't give you advice," he told shareholders, "but [with] the market price being lower than the rights issue, if one wished to buy shares it would be better to do it in the market."
AIB's shares were trading at between 33c and 35c yesterday -- a rights issue at the end of November will offer those same shares at 50c. A shareholder who spent 40 years working for AIB said he would "buy whatever shares were allocated" to him in the rights issue.
Thanking him for the sentiment, Mr Hodgkinson suggested the former AIB staffer "could probably take up the same amount of shares in the market".
Speaking after the EGM, Mr Hodgkinson defended his comments saying: "How could I advise someone [to buy in] if the share price is lower than the rights issue price?"
The comments cast doubts over AIB's ability to convince institutional shareholders to invest in the rights issue, which Mr Hodgkinson said would be "highly dilutive" for the bank's existing owners.