Friday 20 April 2018

State 'will hold only' a minority stake in the group

Emmet Oliver

AIB chief executive Colm Doherty said he remained "confident'' the Government would only end up with a minority stake in the bank once the company sells off its overseas assets.

Mr Doherty rejected suggestions the bank would end up majority state-controlled or nationalised, even though it is facing a huge capital call, which comes to €7.4bn -- seven times its current market value.

"I am confident the State will be a minority shareholder,'' Mr Doherty told reporters. Asked why previous comments from Finance Minster Brian Lenihan seemed to suggest only Bank of Ireland would be in that position, Mr Doherty declined to comment. "You'd have to ask the minister that,'' he said.

Sales of a minority stake in US lender M&T, a majority stake in Poland's Bank Zachodni and some UK assets could deliver up to €3.5bn in capital, according to some analysts. But Mr Doherty seemed to suggest it would be considerably more.

He was asked after selling the assets what would the bank's requirement for capital be and he said it would be anywhere between €2.5bn and €3bn.

This would be raised via a rights issue or an institutional placing. When asked how much would be raised via this route, Mr Doherty said it depended on what demand was out there in private markets.

"We have to determine the appetite in the market,'' said Mr Doherty. He added that Bank of Ireland had used a mixture of routes to get its capital, among them an institutional placing and a rights issue, and this was what AIB was most likely to opt for.

The Government is likely to swap some of its preference shares in the bank into ordinary shares, Mr Doherty hinted. He said this was the "working assumption'' and would be done via the National Pension Reserve Fund, which comes under the aegis of the NTMA.

Mr Doherty appeared to be irritated by the public nature of the asset sales. "Right from the off this was a public event,'' he said. "We're all working extremely hard.''

Mr Doherty said the bank was working closely with the Government and he would like to see the blanket guarantee of deposits extended by at least a year. Any withdrawal of support from the banks by the EU or the Government could have a "systemic'' impact. Irish banks have considerable funding needs in September, he said, and the Government could help by committing now to extending the guarantee.

"In banking, and with markets so fragile, I think it's always better to say things sooner rather than later,'' he added.

Irish Independent

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