Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Ireland’s government has sold its last remaining stake in AIB, returning a second bank rescued during the financial crisis to full private ownership.
The government’s exit from Ireland’s second-largest lender comes three years after the state completed the sale of its stake in market leader Bank of Ireland.
PTSB, the third bank bailed out by taxpayers as the country reeled from the 2008 financial crisis and a property crash, remains 57 per cent publicly owned.
The government stepped in to keep the banks afloat in the global financial crisis, following reckless lending during Ireland’s Celtic Tiger boom.
“AIB profoundly regrets that the institution had to be rescued by the state almost two decades ago and owes an immense debt of gratitude to Irish taxpayers for the support provided during that challenging time,” AIB’s chief executive Colin Hunt said on Tuesday.
The finance ministry said the sale of its final 2.06 per cent stake in AIB raised €305.3mn. It brings to about €19.8bn the total amount recouped by the state from its investment in AIB, just below the €20.8bn it pumped into the bank.
Overall, the state is about €600mn above break-even on its €29.4bn investment in the three banks, the ministry added.
“This is an important milestone in delivering on the government’s policy of returning the banking sector to private ownership,” said finance minister Paschal Donohoe.
The bailout came with strings attached, including a €500,000 cap on executive pay that banks said hampered their ability to attract and retain talent.
“We believe that following this divestment, the government should look to remove the salary caps at both AIB Group plc and Permanent TSB Group to ensure a competitive and fair environment for attracting talent, particularly since Bank of Ireland Group have been free from these restrictions since 2022,” Denis McGoldrick, financials analyst at Goodbody, wrote in a note to clients.
The government says returning the banks to private ownership frees up taxpayers’ money for more productive purposes. It said last year that €3bn from sales of shares in AIB would be invested in infrastructure projects.
The state still holds some warrants in the bank issued shortly after its stock market flotation in 2017 but the finance ministry and AIB said talks were under way regarding their potential repurchase by the bank.
The state’s exit from two of the country’s three high-street banks comes amid new competition in the sector. Avant Money became the first new bank in Ireland in more than two decades when it became the Irish branch of Spanish banking group Bankinter in April.
Digital bank Revolut is now a large player in Ireland, with 3mn customers out of a population of about 5.1mn, while other fintech groups also operate in the country, including the Netherlands’ Bunq and Germany’s N26.
