Don't borrow money to buy - bank shares are not for faint-hearted
Many people will be tempted to take a punt on AIB. The appetite for bank shares is unrelenting in this country, despite the collapse of our banking system and the subsequent taxpayer rescue of them and the bailout of the economy led by the IMF.
So, should you sign up in the hope of getting an allocation of AIB shares in the multi-billion euro flotation? The Government has decided to let retail investors get involved. It is damned if it offers shares to small-time investors, and damned if it does not.
If retail investors are shut out from the flotation, there will be hell to pay.
But the calamity that was the flotation of Eircom (now Eir) in 1999 is still fresh in the minds of ministers. That resulted in 500,000 retail investors losing money as the share price tanked when the technology bubble bust. The bitter recriminations from the Eircom flotation debacle, which became an election issue, have prompted the Government to put in place a strict €10,000 minimum for those who wanted to buy shares when it came to floating Aer Lingus.
The same restriction is now in place for AIB, with the additional requirement that you have to have an account with a registered intermediary.
Anyone considering buying a piece of AIB should think hard before signing up.
We know to our cost in this country that, as well as rising, bank shares can fall to zero, as they did in the case of Anglo Irish Bank.
Take advice before subscribing for shares, and do not borrow to invest.
AIB has been turned around, and is now very customer-focused under chief executive Bernard Byrne.
It returned to profit in 2014 and has been profitable in 2015 and 2016. The bank made profits before tax of €1.7bn last year.
It is paying its first dividend in nine years next week.
The bank has 2.6 million customers, making it the largest bank in the State. It has 206 AIB branches, 71 EBS branches and 20 business centres. AIB has the largest share on new mortgages issued, at 36pc.
Although its non-performing loans are falling, they are still high at €8.6bn.
AIB is very much a play on the Irish economy. It is now essentially a retail and commercial bank, focused on Ireland. In the past it had operations in the US and Poland, and a stockbroking wing. If the Irish economy dips, AIB will suffer.
If you have €10,000 and can't decide whether to use it to buy a car or invest in AIB, buy the car. Bank shares are not for the faint-hearted.