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Noonan set to fire starter on €3bn AIB sale

Allied Irish Banks (AIB) will begin its journey back to privatisation this week as the Government prepares to officially launch a €3bn share sale in a watershed moment for the banking industry and the economy.
It is almost seven years since taxpayers sunk €20.8bn into the then-stricken bank as part of a wider rescue of the Irish banking system – a moment characterised by then-minister for finance Brian Lenihan as a “nightmare” for the government and the Irish people.
This week marks the start of that reckoning.

In what will likely be his last major action as Finance Minister, Michael Noonan is expected to seek cabinet support for the sale of a 25pc slice in the bank as early as today.
That clears a path for the Government to then lodge a formal intention to float (ITF) document to the London and Dublin stock markets later in the week – an action that sets a near-irreversible course for the IPO.

After a long phoney war, the ITF will trigger a flurry of meetings between prospective investors and advisors acting on the sale.
Sources are pinpointing tomorrow or Thursday as D-Day, and under the Department of Finance’s four-week deal time frame, shares will then go free to trade on the stock exchange on or around June 28 or 29.

While Mr Noonan can technically press ahead with the deal without securing parliamentary approval – given the AIB part-privatisation is set down in the programme for government – he has indicated that the Dáil will be told before the starting gun is fired.
That might help quell the turmoil of the past week, when Labour’s Brendan Howlin successfully moved a Dáil motion seeking postponement of the share sale. Though not binding and certain to be ignored, the motion was politically embarrassing.

Mr Howlin yesterday repeated his demand to the Government to delay the IPO.

However, Cantor Fitzgerald analyst Stephen Hall said the Government “would be crazy to miss this opportunity”, with markets buoyant following the French presidential elections.
Mr Noonan initially outlined two windows of opportunity to sell the shares – early summer or in the autumn.

The minister said yesterday that he had 10 days to act, or he would miss the summer window.

Once he does, the nine banks on the deal syndicate will send out their analysts’ research on AIB to potential investors.
That will be swiftly followed by publication of AIB’s prospectus, which outlines a price range for the lender’s valuation.
AIB’s book value is currently €11.3bn. Sources told the Irish Independent that the deal would likely equate to a market capitalisation of €12bn.

Despite a high level of non-performing loans, AIB’s dominance of the mortgage market and potential to expand in personal loans are a key focus for prospective investors.

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