State Completes Full Exit from AIB with €390 Million Final Payment Received
The Irish government has finalized its exit from Allied Irish Banks (AIB) through a significant financial agreement. Minister for Finance Paschal Donohoe has sanctioned the cancellation of €271 million in warrants in exchange for a cash payment of €390 million. This development marks the conclusion of the state’s involvement with AIB, re-establishing the bank as a fully private entity.
Background on the Warrants and AIB
The warrants were initially issued in July 2017 as part of AIB’s Initial Public Offering (IPO). This IPO was notable for being the largest stock market flotation in Europe that year. The warrants granted the state the option to purchase up to 271 million AIB shares at a fixed price of €6.752 per share.
Currently, AIB shares are trading at €7.88, but the Department of Finance decided it was prudent to proceed with the €390 million payment instead of utilizing the warrants. This aligns with the government’s policy of not retaining long-term investments in banks.
Financial Overview
- Total state investment in AIB, Bank of Ireland, and PTSB: €29.4 billion (2009-2011).
- Total cash recovered from investments: approximately €29.7 billion.
- Remaining investment in PTSB: valued at about €900 million.
- Current stake held in PTSB: 57%.
- Total amounts contributed to banks post-crash: €64.1 billion, primarily to Anglo Irish Bank and Irish Nationwide.
- Amount recovered from these investments: around €1 billion, with losses expected on the remainder.
Impact of Cancellation
With this cancellation, the total amount returned to the state from AIB rises to €20.2 billion. Donohoe expressed satisfaction with this final transaction, emphasizing its importance for public finances. The proceeds will be aligned with the Exchequer’s resources and are intended to support the state’s financial objectives.
This move signifies a crucial step in the restoration of financial stability in Ireland following the banking crisis, reflecting positive outcomes for taxpayers and the broader economy.
