Allied Irish Banks plc Issuance of Ordinary Shares to the National Pensions Reserve Fund

The Minister for Finance, Mr. Brian Lenihan T.D., today welcomed the issue by Allied Irish Banks plc (AIB) to the National Pensions Reserve Fund of 198,089,847 ordinary shares in lieu of the annual €280 million cash payment on the Fund’s preference share investment:

“I welcome the share issue to the National Pensions Reserve Fund by Allied Irish Banks. This share issue is in lieu of the cash payment of the dividend due on the €3.5 billion preference share investment made by the Fund in 2009 for the purposes of recapitalisation. It ensures that taxpayers are remunerated in a timely fashion for their investment in the bank.”

The European Commission have requested that discretionary coupon payments on tier 1 and upper tier 2 capital instruments in AIB, which includes the Government preference shares, not be paid while they consider AIB’s restructuring plan. However, the Commission have no objection to payment of the coupon in shares and the National Pensions Reserve Fund is therefore receiving ordinary shares instead of cash.

The National Pensions Reserve Fund now holds 18.6% of the ordinary shares of AIB in issue. The Minister explained:

“The €280 million in ordinary shares issued to the Fund will count towards the additional €7.4 billion equity capital requirement determined by the Financial Regulator so that AIB will meet the new base case capital standards.”

As set out in the Minister’s Banking Statement of 30 March last, to the extent that additional capital is not provided through the disposal of AIB assets and through private participation, the State is willing to convert some or all of its preference shares as required on terms to be agreed that will provide full value for the State. If additional State money is required, it will be provided through investment in ordinary shares by the National Pensions Reserve Fund.

13th May 2010

ENDS

Notes for Editors

On 12 May 2009 the Minister for Finance directed the National Pensions Reserve Fund Commission to invest €3.5 billion in preference shares issued by AIB for the purposes of recapitalisation. The preference shares bear an annual non-cumulative fixed dividend of 8% payable in cash or ordinary shares in lieu. The European Commission has requested that discretionary coupon payments on Tier 1 and Upper Tier 2 capital instruments in AIB not be paid while it considers the bank’s restructuring plan. As a consequence, AIB has today paid the first dividend on the preference share investment in the form of ordinary shares. It issued and allotted to the National Pensions Reserve Fund 198,089,847 of its ordinary shares representing the amount of the preference share dividend due on 13 May divided by the average share price in the 30 trading days prior to today’s date.