State reduces its stake in AIB to below key 30% threshold

The State has sold another 5% of its stake in AIB, bringing its shareholding in the bank to about 25.5% from around 30.5%.

This means that the State’s stake in the bank has fallen for the first time below the key 30% psychological threshold considered by the markets to be a controlling interest.

In a statement, the Minister for Finance said the disposal of the shares was done using a placing to institutional investors.

The price was set through a process known as an accelerated book build, where a company offers shares for purchase during a short window.

The placing price of the shares was €4.90 per share – below AIB’s closing price yesterday evening – and the gross proceeds from the sale will be €592.9m.

The Minister for Finance Jack Chambers said this sum will be returned to the Ireland Strategic Investment Fund pending further consideration by him.

The fact that the State’s shareholding in the bank is now below the 30% threshold could place pressure on Mr Chambers, to lift the cap on pay of bankers at AIB.

The minister said he intends to extend the share trading plan, under which shares have been sold over recent years, by another six months, bringing it up to January 23 of next year.

Shares in the bank have risen by around a third since the State last disposed of 5% of its stake in the bank last November.

AIB Group’s chief executive Colin Hunt said today’s “well-supported” transaction is another important milestone in the normalisation of the share register.

Mr Hunt said the sale will yield a further about €593m for the Irish taxpayer to whom AIB owes an immense debt of gratitude for its support during the financial crisis.

“This brings the total proceeds returned to the State to over €16 billion,” he stated.

“We are in the first year of our new strategic cycle and our transformed Group is well-positioned, generating sustainable profits, supporting our 3.3 million customers and delivering attractive shareholder returns,” he added.

In a statement, the Minister for Finance said this latest transaction represents the State’s fifth such disposal in AIB.

“With each one we have achieved incremental improvements on the placing price, with this latest transaction achieving a price which was 24.7% higher than what was achieved in the previous transaction last November,” the Minister said.

“This transaction was once again well received with significant demand from a large number of high quality international institutional investors,” he added.

“We continue to make significant progress in reducing the State’s shareholding in AIB and this is evident in this shareholding reducing from c. 71% at the beginning of 2022 to c. 25.5% today meaning the free float in AIB has now increased to 74.4% which will be important for the attractiveness of the bank to institutional investors,” he noted.

“The State continues to have a shareholding in AIB worth approximately €3.1 billion, so following the applicable lock-up period, we will again assess additional opportunities for share sales as they arise,” Jack Chambers said.

“We want to continue to normalise the relationship between the State and AIB as it remains this Government’s belief that banking in the main is an activity that should be provided by the private sector,” he stated.

Shares in the bank were lower in Dublin trade today.