AIB’s plan to buy back €1.2 billion of shares from the State hung in the balance on Wednesday evening, as the stock closed to six cents below the price that had been agreed for the deal before global equities slumped five weeks ago.
The US stock market, which often sets the tone for equities globally, turned volatile hours later after the Federal Reserve left interest rates unchanged, as expected, and warned of rising economic uncertainty with trade concerns weighing on households.
The S&P 500 index was slightly higher before the Fed announcement, but subsequently dipped in and out of negative territory.
AIB’s board has until Thursday night to decide whether to go ahead with the buyback deal, which would cut the Government’s stake to about 3 per cent from about 12 per cent, currently. It secured backing from 97 per cent of eligible shareholders for the plan at AIB’s annual general meeting (agm) on last Thursday.
The minimum price was set in late March at €6.26 – based off of AIB’s prevailing market price at the time and before the global stock market rout that followed US president Donald Trump’s tariffs announcement on April 2nd.
AIB’s shares have fallen to as low as €5.16 since then, though they have subsequently rallied strongly. They jumped as much as 3.3 per cent on Wednesday in Dublin to €6.255 – 0.5 of a cent off the agreed strike price.
The stock closed 2.3 per cent higher at €6.20, with the percentage gain matching that of Bank of Ireland. However, the wider European banking sector ended the session down 0.2 per cent.
While there has been a view in the market that AIB would proceed with the deal if it got close to the €6.26 level, it is believed that the bank’s UK stock market listing sponsor Morgan Stanley – which is advising the board on the matter – is of the view that the transaction should not go ahead if that price is not reached.
AIB chief executive Colin Hunt indicated to reporters that if the deal did not go ahead, his preference would be to bring it back to shareholders at an extraordinary general meeting (egm) at another stage this year. If that were to happen, the terms would likely be tweaked to the prevailing stock price.
An alternative would be to open the buyback to all shareholders, as AIB’s board renewed an authority at last week’s agm to repurchase up to 10 per cent of the group’s stock.
