Sunday 18 March 2018

Investors in despair over nationalised bank's value

AIB shareholders see stock plummet to 32 cent after Lenihan's decision


POLITICIANS, businessmen, churches, charities and pensioners who lost millions in the collapse of AIB shares will never recover those losses, given the bank's effective nationalisation last Thursday.

Government sources have confirmed that the failed bank, which would not have survived until the New Year unless the taxpayer stepped in, is unlikely ever to recover its former prime position and looks set for a fire sale at the earliest opportunity.

Following Thursday's High Court approval for additional State funding of €3.7bn, Finance Minister Brian Lenihan, on behalf of the taxpayer, now effectively owns 93 per cent of the bank. To date, taxpayers have now put €14.1bn into AIB.

Since Thursday, the bank has moved to reassure shareholders that the delisting of the bank from the Irish Stock Exchange and move to the Enterprise Securities Market will not affect their value.

However, behind the scenes there is little belief that given the latest bailout, the further need for at least another €6.1bn in February and the forced sale of overseas assets, AIB's shares will ever recover.

The Church of Ireland, politicians including Richard Bruton, Mary Harney and Ned O'Keeffe, and former AIB chairman Dermot Gleeson are among those who have lost most after the collapse in the bank's share value to 32 cent on Thursday.

The Church of Ireland is nursing one of the biggest losses after its €17.3m investment plummeted to just over €260,000 in the wipeout.

Mr Gleeson is also nursing a huge financial loss on his 400,000 bank shares, which were once worth as much as €6m but have plunged in value to just €140,000.

"Being honest, there will be no way such losses incurred by many high-profile people and institutions can ever be recouped, it's a sad sad day for anyone connected with AIB," one senior director told the Sunday Independent.

As a result of the new cash injection, existing shareholdings have been massively diluted, and given the bank's delisting from the Irish Stock Exchange, those who have lost heavily will unlikely ever recover. Added to this is the anticipated further injection of €6.1bn of taxpayers' money in February, which will push up state ownership to over 95 per cent.

Of even greater concern are the wide-ranging powers which have been assumed by Mr Lenihan and the new rules that say that the taxpayer's interest is prioritised over those of shareholders.

"The board has a new and specific duty to have regard to the public interest. The public interest must prevail if that public interest conflicts with the best interests of the bank," the new legislation states.

Mr Lenihan said AIB would not have survived without the Government's action yesterday. "We wouldn't have had AIB on January 1 if this investment wasn't made," he said.

AIB's board said in a statement that it believed that the money was "critical for the continued activities of the company". AIB said it was considering a voluntary deal seeking to share losses with subordinated bondholders.

Sunday Independent

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