Business Irish

Monday 19 August 2019

Updated valuation sought for State's stake in AIB

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan

Colm Kelpie

The National Treasury Management Agency (NTMA) is looking to hire valuers to give an updated assessment of the State's shareholding in AIB. This is ahead of a possible sale of a portion of the stake in the bailed-out bank next year.

External advisors are being sought to value the State's 99.8pc equity holding in the bank, which is likely to be the last valuation before the general election.

At the end of last year the State's investment was valued at €13.3bn, including €7.16bn in ordinary shares, €4.55bn in preference shares, a type of loan, and €1.6bn in so-called contingent convertible capital bonds, or CoCos. But since then AIB announced its first full year profit since 2008, which is likely to have pushed up the value of the bank further.

Finance Minister Michael Noonan said last week that AIB will repay about €4bn of its €21bn bailout to taxpayers over the coming year.

The State-owned lender got the green light from Europe to repay €1.7bn between now and Christmas, with the rest expected over the course of next year.

AIB will repay part of the State's preference shares with the rest converted to equity, AIB said on Friday. The payment will be partly funded by AIB issuing junior bonds.

Fiona Hayes, of Cantor Fitzgerald Ireland, said she expects AIB will access markets in the coming weeks with two separate bond issues.

"We anticipate firstly a Lower Tier 2 bond within the next 1-2 weeks followed by Additional Tier 1, with the possibility of the second issue being completed before year-end too," she said.

Mr Noonan said all the money would be used to pay down debt.

The State's total investment in AIB is around €20.7bn and dates back to 2009 when then Finance Minister Brian Lenihan directed that the National Pension Reserve Fund (NPRF) make an investment of €3.5bn in preference shares issued by the bank.

The NPRF subsequently invested a further €8.7bn in two tranches while a capital contribution totalling €6.1bn was also made in the bank by the NPRF and the minister, bringing the total shareholding to 99.8pc.

Irish Independent

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