AIB has received the go-ahead from the EU to restructure its capital base to start repaying some of the bailout it got from Irish taxpayers. It will make make a payment of €1.7 billion to the Irish government as part-payment of the preference shares it holds.
It is the first repayment by AIB of its €21.8 billion in bailout funds received from taxpayers after the financial crash in late 2008.
In addition €1.6 billion in contingent capital notes held by the State will be repaid in full on 26 July next year. The capital reorganisation is also subject to shareholder approval at an extraordinary general meeting but the Irish taxpayer owns 99.8 per cent of the bank’s shares.
The EGM is expected to be held Ireland’s Finance Minister Michael Noonan said AIB’s capital reorganisation by AIB would ensure the bank had a balance sheet that was “fit for purpose”.
He said Ireland would receive the cash in the “coming months” following the return of the €1.6 billion in contingent capital notes. “I am confident that the State is on track to achieve a return approaching €4 billion from our investments in the bank in the near term,” said Mr Noonan.
Mr Noonan said AIB was now back in profit and contributing to the “continued growth” of the Irish economy. Taxpayers would get all of the bail-out money back, he predicted.
AIB chief executive Bernard Byrne said: “The approval of these capital actions (by the ECB and EU) represents another key milestone in the transformation of AIB. “The capital reorganisation will support a sustainable and compliant regulatory capital structure underpinning our business plans and positions the group to repay capital to the State and return to private ownership over time.”
Mr. Noonan said any decision on privatising AIB and the sale of the Irish government’s shares would not now be made until after the General Election and would fall to the next government.