Business Irish

Tuesday 21 November 2017

State's share in AIB heads for 95pc after UK sale put on hold

The bank's new
executive chairman David
Hodgkinson addresses
The bank's new executive chairman David Hodgkinson addresses shareholders
AIB shareholder Dermot Carroll takes a photograph of proceedings yesterday during the EGM of AIB in Ballsbridge
Laura Noonan

Laura Noonan

THE State's share in AIB could soar to as much as 95pc after the embattled bank yesterday admitted that plans to sell its UK businesses were "on hold".

The failure of efforts to sell the UK operations was confirmed by the bank's newly appointed executive chairman David Hodgkinson, who said "no satisfactory bids" had been received.

Mr Hodgkinson was speaking after an extraordinary general meeting (EGM) to approve the $2bn (€1.4bn) sale of AIB's stake in US bank M&T.

AIB has already agreed to sell its Polish interests for about €3.1bn and was trying to raise more than €1bn from selling First Trust in Northern Ireland and AIB GB in Britain.

"There was an attempt to sell it [the UK business] but it couldn't be sold on satisfactory terms," Mr Hodgkinson said yesterday.

"We're now going to work with the UK bank to try and strengthen and stabilise it. We will re-examine all options."

Analysts last night said the failure to sell the UK business was likely to lead to even greater levels of state ownership by next March.

The Government is already on track to own 92.5pc of AIB if it is the sole underwriter of a planned €5.4bn rights issue later this month.

If the Government also has to stump up the money that can't be realised from the UK sale, state ownership could go as high as 95pc, NCB analyst Ciaran Callaghan said last night.

The figure, which was confirmed by other analysts, is based on the Government converting another €1.6bn of its preference shares to make up the bank's capital shortfall.

AIB has been given until March to raise the final whack of its capital, so the State's shareholding won't go beyond 92.5pc until then, analysts said.

The bank intends to remain listed on the stock exchange even if it is almost entirely owned by the State, and it is currently exploring the technicalities with the stock exchange.

The prospect of even higher state ownership emerged after an often-heated EGM, where Mr Hodgkinson vowed to "overcome" the "challenges" facing the bank.

AIB is kicking off an independent review that will "stress-test everything on the balance sheet" and deliver results in the next three months.

"I believe we can achieve a huge amount in a fairly short period of time," Mr Hodgkinson stressed.

The former HSBC executive also vowed to "conduct a full international search" so AIB can have a "chief executive of the highest quality", though he admitted the process could take six months.


Asked about the bank's immediate future, Mr Hodgkinson said it was too early to say when a long-awaited announcement on staff cuts would be made.

Mr Hodgkinson also faced down questions about his own remuneration, confirming this newspaper's reports of his €500,000 salary and accommodation package.

Asked whether he would be buying AIB shares, Mr Hodgkinson said he would give the matter "serious consideration", adding that his position was an interim one.

Despite a few dissenting voices, the EGM ultimately approved the sale of AIB's 22pc stake of M&T.

Irish Independent

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