AIB has completed the purchase of €500 million of its own shares from the State, further reducing the Government’s stake in the lender from 24.88 per cent to 22.04 per cent, Minister for Finance Jack Chambers announced on Monday.
The buyback was flagged in August after the bank posted a 30 per cent increase in its net profit to €1.11 billion.
The off-market transaction saw AIB acquire €500 million of its shares at a final price of €5.445 per share, the Minister said in a statement.
The buyback is “a further positive step” towards the normalisation of the “relationship between both parties” following the government’s bailout of the lender in the wake of the 2008 financial crisis, Mr Chambers said. “It continues to be this Government’s belief that banking in the main is an activity that should be provided by the private sector and that taxpayer funds which were used to support the banking sector should be recovered and put to more productive uses like enhanced delivery of public services and helping us to overcome many of the challenges we face now and into the future including areas like housing and public infrastructure.”
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AIB has now returned €16.6 billion to the State since the Government began unwinding its stake in the lender in 2022. Since then, the State’s shareholding in the bank has fallen from 71 per cent to 22.04 per cent following the latest transaction. The bank had received a €20.8 billion bailout post the 2008 financial crash.
“The State remains the largest shareholder in AIB and I will continue to assess additional opportunities for share sales as they arise,” Mr Chambers said.
Shares in AIB were up by close to 5 per cent in early trading on Monday following the announcement.
The Government was advised by NM Rothschild & Sons Limited and William Fry LLP on the transaction.
In interim results published last month, AIB followed rival Bank of Ireland in raising its full-year net interest income forecast as European Central Bank (ECB) interest rates are now expected to be higher at the end of the year than previously thought.
AIB said it sees its net interest income amounting to about €4 billion for the full year, up from a projection for a figure in excess of €3.65 billion. It estimated the ECB’s deposit rate will fall to 3.25 per cent by the end of 2024 from 3.75 per cent currently. It had previously factored in a decline in the official rate to 2.75 per cent.
AIB, which is awash with surplus cash, had almost €36 billion on deposit with central banks at the end of June, mainly with the Central Bank of Ireland, where it is earning the ECB’s 3.75 per cent deposit rate.
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