Allied Irish Banks
In 2017 the SFAD planned and implemented an IPO (Initial Public Offering) of a portion of the State’s shares in AIB, listing the stock on the premium segment of the Irish and London stock exchanges. The IPO resulted in the sale of 28.75% of the banks ordinary shares (including a greenshoe mechanism) and recouped €3.4 billion for the Irish exchequer. The State now retains circa. 71% of the bank’s Ordinary Shares.
The IPO of AIB, and return of value to the taxpayer was possible following considerable progress made by the bank since the financial crisis, returning to sustainable profitability since 2014 and reducing its impaired loans from peak by 70% while building up a strong capital base. The reorganisation of the bank’s capital at the end of 2015, marked a significant milestone as it modernised the bank’s capital structure and facilitated the consolidation the bank’s shares. It also allowed for the return of €1.7 billion to the State, which was followed by the redemption of the ‘CoCo’ (Contingent Capital) instrument in July of 2016, which returned a further €1.6 billion.
The State’s total investment in AIB amounted to circa.€20.75bn and dates back to 2009 when the Minister for Finance directed the National Pension Reserve Fund (NPRF) to make an investment of €3.5bn in preference shares issued by the bank. Subsequent to this the NPRF was further directed to invest €8.7bn in two tranches (December 2010 and July 2011) while a capital contribution totaling €6.1bn was also made by the NPRF and the Minister. During the crisis AIB also acquired EBS which itself had previously been recapitalised and taken over by the State.
The SFAD’s priority is to protect the State’s investment in AIB while planning a phased exit over time that maximises the recovery to the taxpayer. Under the Relationship Framework Agreement in place between the State and the bank, strategic and day-to-day management decisions are a matter for the board and management of the organisation.