The Irish Government has confirmed that it has relinquished majority control over Allied Irish Banks (AIB) for the first time since the bank was bailed out by taxpayers 12 years ago. Finance Minister Michael McGrath announced that a placement of shares with investors amounting to 5% of the bank has brought the Government’s stake to just below 47%. Further reductions are expected in the coming months after Mr McGrath extended the Government’s so-called share trading plan to late January next year. The shares placing raised €412m and is the latest move by the Government to return AIB to full private ownership.
The Department of Finance launched an initial sale of AIB shares five years ago on stock markets which then reduced its stake to 72%. It said it has raised a total of €698m since January last year when it started its current programme of share placings. During the financial crisis, taxpayers injected a total of €42bn to keep the doors open at AIB, Bank of Ireland, and Irish Permanent, as well to cover the costs entailed by the collapse of Anglo Irish and Irish Nationwide.
The Irish Government has been helped by the share price gains chalked up by the Irish banks ever since the European Central Bank started to hike rates last summer, and by the lessening in competition with the withdrawal of key rivals Ulster Bank and KBC Bank. AIB shares have soared 57% from a year ago to value the lender at €10bn, while Bank of Ireland shares have climbed 34% to value the lender at €9bn.
It is expected that the Irish Government will continue to reduce its stake in AIB, as part of its plan to sell down its remaining shares in the bank. The share trading plan, which was extended by Mr McGrath, enables the Government to sell its shares in an orderly and measured way, avoiding any potential negative impact on the market. The Government has already sold down its last remaining small shareholding in Bank of Ireland last year, and this latest move is part of the ongoing process of returning the Irish banking system to full private ownership.
The move has been welcomed by investors, who see it as a positive sign for the Irish economy. The Irish banking system has come a long way since the financial crisis, and the fact that the Government is now able to reduce its stake in AIB is a testament to the strength and stability of the sector. It is hoped that the continued growth and stability of the Irish banking system will help to support the wider economy and attract further investment in the years ahead.
Overall, the decision by the Irish Government to reduce its stake in AIB is a positive step for the Irish banking sector and the wider economy. The move is part of a wider strategy to return the Irish banking system to full private ownership, and it is hoped that this will help to support continued growth and stability in the years ahead. Investors will be watching closely to see how the Irish banking sector develops in the coming months, but for now, the outlook is positive.
