The limited success of AIB’s recent “odd lot” offer for shareholders leaves both sides in something of a limbo.
Ireland’s three main banks have all gone down the route of offering cost-free exit options for shareholders with holdings that have been decimated by the financial crisis, and by subsequent share consolidations.
In AIB’s case, it happened in 2015 when one new share was issued for every 250 shares held before that. As a result, every share worth just under €10 that an AIB investor holds today represents an original investment of around €5,770 if the shares were originally bought at their pre-crash peak.
A previous odd-lot offer in 2024 saw almost 90 per cent of those holding 20 or fewer shares in the bank selling up. This time, the figure for shareholders with 50 or fewer shares was just 59 per cent.
As shareholders were included by default, that means more than 40 per cent of those with fractional holdings in the business actively chose to stay invested by opting out of the offer.
So how come the take-up was so poor this time?
Some of those shareholders might not live in Ireland or the UK – the only jurisdictions covered by the scheme.
Others will have noticed the offer price jumped 78 per cent in just over 18 months since the 2024 odd lot offer. And, while the bank warned it had no plans for any further similar offers “for the foreseeable future”, it would say that, wouldn’t it?
That surge in the share price – plus a return of dividends – will also give some shareholders hope that their much-reduced holdings might still be worth hanging on to.
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And, of course, not everyone is out of pocket. Anyone who has bought into the bank since 2017 has actually made money, with some of them multiplying the value of their investments.
Be that as it may, the holdouts do present a headache for the bank, which had made it clear that managing very small shareholdings involves “ongoing administrative costs that are disproportionate to the size of those holdings”.
At least it can be reassured that any remaining shareholders are alive with all inactive holdings now cleared off the books.
