Irish government slashes AIB shares to 12-year low in latest share disposal

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The Irish government plans to reduce its stake in Allied Irish Bank (AIB) to a 12-year low of 40% and sell an additional 5% stake. The deal, worth an estimated 500 million euros ($570 million), is part of a series of disposals carried out since the launch of the Treasury Department’s trading program in January 2022. The program, which has been extended twice, aims to sell about 1% of AIB shares each month.

This latest disposal follows the sale of a further 5% stake and the buyback of 215 million euros ($245 million) of state shares in June. The move is in line with the government’s ongoing efforts to undo a 20.8 billion euro ($23.7 billion) bailout package provided to AIB during the financial crisis. After the transaction is completed, AIB’s total repayments will reach approximately 13.6 billion euros ($15.5 billion).

But it is worth noting that taxpayers still face a shortfall of about 2.9 billion euros ($3.3 billion). The government’s remaining stake in AIB is worth about 4.3 billion euros ($4.9 billion), which is not enough to cover the remaining bailout funds. The recovery includes proceeds from 2017 IPOs, smaller equity offerings, larger block sales and share buybacks.

Treasurer McGrath announced the stake sale after markets closed on Monday, with no further sales planned for the next 90 days without written consent. Advisors Rothschild, William Fry LLP and Allen & Overy LLP are overseeing the sale process, which includes allocating shares to institutional investors through an immediate book-opening process and setting a share price.

In related news, AIB revised its full-year net interest income forecast for the third time this year. Last year’s net NII was 2.16 billion euros ($2.46 billion) and net NIM was 2.74%. The bank currently earns 4% interest on excess customer deposits worth 29.5 billion euros ($33.7 billion) following a series of interest rate hikes by the European Central Bank to combat inflation. However, the shift to high-yield savings products has been slow, with 95% of household savings still held in low-yield demand accounts.

More information about InvestingPro

According to real-time data from InvestingPro, Allied Irish Bank (AIB) has a market capitalization of $11.4 billion and a price-to-earnings ratio of 10.04. Revenue growth for the trailing 12 months ending in Q2 2023 was 14.96%. This is consistent with InvestingPro’s suggestion that AIB’s revenue growth is accelerating.

InvestingPro also offers two more insightful tips on AIB’s financial health. First, AIB’s earnings per share continue to grow. This is a positive sign to potential investors as it shows the company’s profitability. Second, despite the company’s revenue growth and rising earnings per share, InvestingPro Tips warns that poor earnings and cash flow could force the company to cut its dividend. This is important information for investors who rely on dividends for income.

In short, the InvestingPro platform provides more detailed insights and tips about AIB and other companies. With InvestingPro, investors can make smarter decisions based on real-time data and expert advice.

This article was created and translated with the help of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.

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