Paschal Donohoe, the Minister for Finance, has agreed to cancel over 271 million “warrants” in return for a cash payment of €390m. The warrants, which gave the minister the right to buy ordinary shares in AIB at a certain price, were granted in July 2017.
The cancellation follows the sale of the State’s remaining shares in AIB last June, and marks the return of the bank to full private ownership.
As part of the Initial Public Offering (IPO) in June 2017, the biggest stock market floatation in Europe that year, it was agreed that AIB would issue the State with “warrants” as a way of hedging against a scenario in which the share price went on to increase dramatically.
The warrants allowed the State to buy back up to 271 million new AIB shares, which would have equated to about 12.7pc of its total issued share capital at that time, at a price of €6.752 per share.
AIB shares are currently trading at €7.88 but the Department of Finance says that in line with a policy of the State not being a long-term investor in banks, it instead decided to cancel the AIB warrants in return for the €390m.
The Government says a total of €29.4bn was invested in AIB, Bank of Ireland and PTSB between 2009 and 2011 to bail them out after the financial crash. It says, so far, about €29.7bn has been recovered in cash by way of disposals, investment income, liability guarantee fees, and the warrants.
It says the remaining investment in PTSB, which has now been put up for sale, is valued at about €900m. The State still holds a 57pc stake in the smallest of the three domestic pillar banks.
“This means we are currently €1.3bn above break-even on our €29.4bn investment in the domestic banks,” the Department said.
Finance Minister Paschal Donohoe. Photo: Collins
Today’s News in 90 Seconds, Friday October 31
Overall, however, the Irish taxpayer put a total of €64.1bn into the banks after the crash. This included €34.5bn into Anglo Irish Bank and Irish Nationwide, of which only about €1bn has been recovered. The rest will be written off.
Mr Donohoe welcomed what he described as the final transaction with AIB.
“When combined with the €19.8bn already returned to the State, the total amount returned from our investment in AIB will reach €20.2bn,” he said. “The proceeds from this transaction will be held within the Exchequer and will ultimately be used to benefit the State.”
