About 121 million ordinary shares are to be sold, reducing the State’s stake in the bank by five percentage points, from 30.5pc to 25.5pc.
Making the announcement the Minister for Finance said he expects to extend the AIB share-trading plan managed by Merrill Lynch for a further six months, bringing it to January, 2025.
That trading plan will continue to include the provision that the Minister’s intention is to sell up to another 15pc of the State’s shareholding. However shares will not be sold below a certain price, which the Department of Finance believes represents fair value for the Irish taxpayer.
“The actual number of shares sold will depend on market conditions, among other factors,” the Department said in a statement. “Proceeds generated from the latest phase of the AIB trading plan amount to approximately €617m. In total, approximately €1.45bn has been raised from the AIB trading plan since it became operational in January 2022.”
The State has been steadily reducing its shareholding in AIB which dates back to the bank bailout. At the beginning of 2022, it still stood at 71.1pc.
As the Government slow returns the bank fully into private ownership, however, the pressure will ratchet up on Jack Chambers, the new Minister for Finance, to lift pay restrictions. AIB has claimed the pay cap of €500,000 is a “material risk” to keeping senior staff, especially compared to Bank of Ireland.
When Michael McGrath, the outgoing Finance Minister, met with AIB chairman Jim Pettigrew late last year, he said the pay cap was under consideration and “will be reviewed at the appropriate time”.
There has been a steady stream of correspondence on the subject between the two sides since then, according to records released this week to the Irish Independent under the Freedom of Information Act.
Ann O’Brien and Raj Singh, two non-executive directors, have also written to the Minister about the salary cap, but the letters and their responses have not been released by the Department on the basis that they are part of a “deliberative process”.
Mr Pettigrew has told the Department that the removal of the pay cap would not mean a return to the past, as a stronger governance around remuneration policies is now in place. For example, even though AIB could up to €20,0000 per employee in variable pay, they capped it at €12,700 last year.
