Business Irish

Sunday 21 January 2018

Noonan targets AIB float straight after election

Finance Minister Michael Noonan and AIB chief executive Bernard Byrne at yesterday’s SBCI announcement. Photo: Shane O’Neill
Finance Minister Michael Noonan and AIB chief executive Bernard Byrne at yesterday’s SBCI announcement. Photo: Shane O’Neill
Peter Flanagan

Peter Flanagan

THe Government will start the process of selling off its stake in AIB as soon as the general election is over if it is returned to office.

Finance minister Michael Noonan said he would "immediately press the button" to start a sale of 25pc of the bank if he is still in the job after the election.

Speaking in Dublin, Mr Noonan said the lender would have its principle listing on the London Stock Exchange. Up to now, AIB's main listing has been in Dublin.

"If the Government is back in office, immediately I will press the button to make arrangements for an IPO of AIB shares and we intend, under advice, to sell 25pc.

"The principle sale will be on the London Stock Exchange (LSE). and even in terms of the LSE, that will be the third-biggest IPO that ever went through on it.

"So we aren't talking about small potatoes and if we get the timing right we will get significant money back," he said.

Mr Noonan said there were two windows for the flotation: in early summer or autumn.

At the moment an autumn float is seen as more likely, as that would come after the bank's half-year results are published in July.

Those results are likely to show steady improvement in the bank's fortunes and could help push up its value. The minister is "leaning" towards autumn but is yet to fully make up his mind on the matter.

He confirmed AIB chief executive Bernard Byrne's view that it may take a decade for the lender to leave State hands completely, and noted that in Sweden in took nearly 20 years before the Swedish government sold off its last remaining shares in the banks there.

"The consideration is when we can get the best return for the taxpayer," he said. Mr Noonan was speaking after AIB formally repaid the first part of its €21bn bailout, and transferred €1.64bn to the State's coffers.

The repayment will be used to pay down debt. AIB is currently valued at just under €12bn, but the minister said the only true way to value the business was to transfer it back to the private sector. That way the shares are traded regularly and it becomes much easier to get a handle on the worth of the lender, he said. His comments came at the launch of a new partnership between AIB and the Strategic Banking Corporation of Ireland (SBCI).

Under the terms of the deal, the SBCI will supply €200m to AIB which will lend it to small firms and farmers at a variable interest rate of 4.5pc. That is about 2pc below the rate on "normal" AIB business loans.

This is the second deal between the two bodies. The State-controlled SBCI supplied an initial €200m to AIB last March. That has since been doled out to about 5,000 customers across the country.

In a statement, AIB said there had been "strong demand from the hospitality, retail, services, agriculture and manufacturing sectors countrywide".

"The average drawdown was €28,500, but loans drawn down ranged in size from €1,000 to €1m," it added.

AIB chief executive Mr Byrne said it was "encouraging to see the range and scale of businesses approved for funding". He added: "This additional €200m will help small businesses and farmers to grow their businesses, create employment and support the economy."

SBCI chief Nick Ashmore said it was "a sign of the very strong appetite for SBCI loans that we have reached this stage so quickly and we are delighted to provide AIB with another €200m in fresh funding to meet this continued demand".

Shares in the bank were little changed at 4c.

Irish Independent

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