Long-awaited AIB share sale under threat if Coalition falls

AIB’s planned stock market flotation could be put on hold or even scrapped if the Government falls.

Asked yesterday if a change of government would affect the plan to sell 25pc of the bank in a stock market listing, AIB chief executive Bernard Byrne said: “That’s a very good question.” The ultimate decision to push ahead with a share sale is in political hands because the shares are State owned, he said.

The plan to list a quarter of the bank’s shares on the stock market is not a true initial public offering (IPO), which would be controlled by the bank’s own board, he pointed out.

That’s because the shares will be sold by the State not by the bank itself.

“At the end of the day this is fundamentally a political decision,” Bernard Byrne said.

Earlier, AIB announced pre-tax profits of €1.7bn for the year to the end of 2016 and proposed a shareholder dividend of €250m. The dividend is AIB’s first since 2008 and the first from any Irish-listed lender since the crash.

As a 99.9pc shareholder, the State will get almost all of that cash. The tiny remaining fraction of the bank is owned by 80,000 ordinary shareholders, who are in line for payouts. Mr Byrne said the bank is currently looking at the logistics of distributing the dividend. The costs of postage could dwarf payments.

The bank said that 2016 was a “milestone year”. Profits reflected “strong sustainable business performance,” writebacks of previously soured loans and gains from the sale of a stake in Visa Europe.

Read more: AIB is ready to float, but long-term will need another string to its bow

Mr Byrne said that AIB returned €1.8bn to the State in 2016 bringing the total recovered from AIB to €6.8bn – a mix of in capital, dividends, fees, interest and charges.

It’s still well short of the €21bn pumped into the lender by taxpayers during the financial crisis. A share sale will boost that recovery further. The bank is ready for that sale, and the market is in a “sweet spot”, Mr Byrne told Bloomberg Television.

The results “confirm the view that 2017 represents an appropriate time to consider an initial public offering of AIB”, he said.

That just leaves the Government to pull the trigger. The results show mortgage lending increased by 22pc and the bank said it boosted its market share last year. AIB’s stock of impaired loans, including mortgages in arrears dropped below €10bn at the end of 2016 for the first time since its bailout.

AIB is one of the banks subject to a Central Bank of Ireland probe into customers who were wrongly kept off cheap tracker mortgages over the past 10 years. So far, 2,600 such cases have been fully remediated, and the bank is working through a further 400 cases, Mr Byrne said. A pot of €190m to cover the costs of finding and rectifying the cases has not been increased, he said.

Mr Byrne said he didn’t think the scandal was a result of any “malice” from the bank.

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