Advisor Rothschild still monitoring sale of AIB

A decision yesterday by the British government to postpone the sale of shares in Lloyds Bank because of the global stock market rout has raised the first question mark about the timing of any sale of shares in AIB here.

Investment bank Rothschild is continuing to advise the Irish government and is monitoring stock markets in relation to State-owned AIB, the Department of Finance told the Irish Examiner yesterday.

It will be up to the new government after the election to decide on the sale of AIB, the department said.

Rothschild started working for the Government on the potential sale of AIB as an independent financial advisor last month.

However, since then stock markets around the world have had the roughest start of any new year since the financial crisis.

The uncertain outlook for the Chinese economy and the effects of the slump in oil have raised investors’ fears about stretched market valuations for companies everywhere.

Some senior bankers warned this month the scale of the stock market rout signals that worse could come this year.

Britain had planned to further reduce its stake in Lloyds through a sale to major investors in the first few months of 2016.

UK chancellor George Osborne cited “economic responsibility” and “turbulent” markets for the decision to postpone the sale of shares in the bank.

The market rout has sent Lloyds shares down 19%. They now trade below the UK government’s 73.6 pence break-even price.

Lloyds shares were to be offered to retail investors at a 5% discount to the market price, with a bonus share for every 10 shares held by the investors for more than a year.

Finance minister Michael Noonan last month said that if the Government were to get back into power after the election, it would almost immediately set in motion plans to sell a 25% stake in AIB to the markets.

He signalled that though any AIB sale could take place at the earliest in May or June, it would more likely occur in the autumn.

Any sale would be predicated on securing the best value for the Irish taxpayer, Mr Noonan said.

John Cronin, head of financials research at Investec Ireland, said it would take the slump in stock markets to persist or even deepen this year for the Government not to go ahead with an IPO.


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