Monday 11 December 2017

Royal Mail share spike haunts Noonan's AIB sale

Former British prime minister David Cameron
Former British prime minister David Cameron

Gretchen Friemann

AIB yesterday unveiled the Government's insurance policy against a possible share spike after the bank's initial public offering later this year - an event that risks accusations of short-changing the taxpayer.

Former British Prime Minister David Cameron's administration faced a storm in the aftermath of the Royal Mail's privatisation after the postal service's value rocketed.

In an effort to avoid a similar problem, Minister for Finance Michael Noonan has introduced a measure enabling the State to buy back into the float.

The move was revealed in AIB's trading update and means the Government will have the right to buy up to 10pc of the bank's capital at double the IPO price. AIB chief executive Bernard Byrne described the mechanism as "good protection for the state... in the event things completely outperform".

But he stressed that a doubling of the bank's market capitalisation in a decade represented a "high-quality problem". He said the warrant was inserted in 2015 as part of the a wider capital restructuring.

Irish Independent

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