State fully exits AIB after receiving final transaction of €390 million

THE STATE HAS fully exited from AIB after the completion of its final transaction with the bank for €390 million.

During the financial crash, the government injected billions into several Irish banks, including AIB, to prevent them from failing.

Permanent TSB (ptsb) was also one of these banks bailed out by the government – it put itself up for sale yesterday.

It had been the last major state-owned bank left but is now seeking to return to private ownership after a return to profitability.

Finance Minister Paschal Donohoe welcomed the completion of the final transaction with AIB.

The Government sold its last shares in AIB during the summer but retained over 271 million stock warrants in the bank.

A stock warrant gives the holder the right to purchase a company’s stock at a specific price and at a specific date.

The stock warrant does not represent immediate ownership of the stock, only the right to purchase the company shares at a particular price in the future.

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At the time of the bank’s initial public offering (IPO) in 2017, AIB issued the State with warrants as a means of hedging against a scenario in which the share price increased significantly post IPO.

These warrants allowed the State to buy back a stake in the bank if the share price went above €6.752.

However, in line with Government policy for the State to not be a long-term investor in banks, Donohoe instead decided to cancel the AIB Warrants in return for €390m.

Donohoe said the warrants cancellation transaction is “a very important step for both the Company and the State” and “results in a further €390m recovered from our investment”.

This €390m transaction will bring the total amount returned from the investment in AIB to €20.2 billion.

Donohoe said the proceeds from this transaction will be held within the Exchequer and “will ultimately be used to benefit the State”.

A total of €29.4 billion was invested in AIB, Bank of Ireland and ptsb between 2009 to 2011.

To date, €29.7 billion has been recovered in cash.

The remaining stake in ptsb is currently valued at around €0.9bn, meaning the State is currently €1.3 billion above breakeven on €29.4 billion investment in domestic banks.

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