Bank of Ireland cash returns to state nearly €6.5bn as share sale continues


The government has raised more than half a billion euros from the sale of Bank of Ireland shares on the stock exchange since last June, according to Finance Minister Paschal Donohoe, who confirmed that the drip sale of shares -drip would continue.

This brings to €6.5 billion the amount received by the Irish state under its €4.7 billion crisis rescue package. This figure includes bailout bond redemptions, equity sales, dividends, coupons and collateral fees.

The minister reduced the state stake from 13.9 percent last summer to less than 5 percent today through two rounds of share sales, raising 532 million euros. The minister said a third share sale process will now run until October 18, when the current stage will end later in May.

Analysts and Bank of Ireland chief executive Francesca McDonagh have previously said they expect the lender to return to full private ownership next year, making it the first of three banks to be bailed out. of the state to do so.

The average price reached during the initial sale phase last year, during which 249 million euros were raised, was 4.96 euros per share. This average price rose to €5.64 per share in the second phase, raising €283 million.

“The share swap plan, which slowly sells our shares into the market, has allowed us to benefit from the gradual rise in Bank of Ireland’s share price since last summer and I think it is in our interest to extend the plan for a further period,” Mr. Donohoe said.

Redemption of shares

“We had previously speculated about a potential extension of the business plan or placement of the residual government stake (of around 3%, we estimate) at the end of the business plan in May and the extension announced today now facilitates a full exit from the State’s investment in BIRG [Bank of Ireland Group] by October,” said John Cronin, analyst at Goodbody Stockbrokers.

Bank of Ireland said on Wednesday it would buy back up to 50 million euros of its shares over the next seven weeks in its first share buyback program since 2004, before the financial crash. The stock purchase began on the day of the announcement.

“The Minister reiterates the government’s aim of returning banks to private ownership in this morning’s announcement and this comment, together with the announced extension, will no doubt lead to speculation about what the state might choose to do with his stake in AIB next,” Cronin said. noted.

AIB said last month it was in talks to buy some 91 million euros of the state’s stake in the bank as part of a plan to return 213 million euros to shareholders through dividends and share buybacks.

The government, which ended up with a 71% stake after AIB’s IPO in 2017, began selling some of its remaining shares in January in a drip exercise that was on track to reduce its stake to around 68-69% by mid-year, analysts say.

A €91 million share buyback would reduce the stake by a further 1.4%, based on the current market value of AIB’s shares.

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