AIB said it has spent €390 million buying back stock warrants that the State has continued to hold in the bank after selling its remaining shares in the lender during the summer.
The deal brings the total that the State has recovered from the bank’s €20.8 billion crisis-era bailout to almost €20.2 billion – leaving a shortfall of a little over €600 million.
AIB handed the warrants to Minister for Finance Paschal Donohoe at the time of the bank’s initial public offering (IPO) in 2017, giving the State the right to buy back up to a 9.99 per cent stake in the bank if it doubled in value in the space of a decade from its €4.40 IPO price.
They were designed to avoid officials being embarrassed in the event of a massive surge in AIB’s share price after the IPO.
While the warrants were out of the money for much of that period, they reached break even point earlier in February as the stock soared following better-than-expected annual results. AIB is led by chief executive Colin Hunt.
[ Donohoe delayed approving sale of State’s final shares in AIBOpens in new window ]
“The completion of this warrants cancellation transaction with AIB is a very important step for both the company and the State,” Mr Donohoe said in a statement on Friday. “It is the final transaction with AIB and results in a further €390 million recovered from our investment in the company.”
The proceeds from this transaction will be held within the Exchequer and will ultimately be used to benefit the State, he said.
A total of €29.4 billion was invested in AIB, BOI and PTSB over the period 2009 to 2011. To date, about €29.7 billion has been recovered in cash by way of share and bailout bond disposals, investment income, bank guarantee fees, and the AIB warrants transaction.
The remaining 57 per cent stake in PTSB is currently valued at about €900 million, after shares in the bank soared 23.4 per cent on Thursday on news that the lender had put itself up for sale.
