AIB mulls overseas expansion drive

Shares in AIB slipped yesterday, on their first day of unconditional trading, but remained more than 7% ahead of the €4.40 price they floated at on Friday.

After strong early trading following the start of conditional trading at the end of last week, the shares opened yesterday at a price of €5.20. However, they closed their first full day’s trading on the Irish and London Stock Exchanges down nearly 9% at €4.74; albeit still 7% ahead of their IPO price.

The sale of between 25% and 29% of the State’s near total ownership in AIB is due to bring in around €3.4bn to the Government’s coffers, thanks to an over-allotment option available to investors in the sale.

Welcoming Europe’s biggest banking sector IPO, after the Dublin opening bell was rung by AIB chief executive Bernard Byrne yesterday, Irish Stock Exchange chief Deirdre Somers said: “This is a very positive step for AIB and the banking sector of Europe’s fastest-growing economy.”

For his part, Mr Byrne said the partial IPO — the State still owns well over 70% of the bank and will do so for the foreseeable future — marks “another important milestone” and “provides us with a platform to diversify our shareholder base within Europe and beyond”.

AIB returned to profit in 2014 and paid the State €280m, earlier this year, in its first dividend for nearly nine years on the back of a pre-tax profit of €1.7bn for 2016. The bank is due to publish results for the first half of 2017 at the end of next month.

Speaking to Bloomberg television after yesterday’s float, Mr Byrne said the bank is considering embarking on an international expansion drive on the back of its return to growth.

While it has a small presence in both the UK and the US, AIB sold off its major overseas interests — a large stake in Polish lender Bank Zachodni in 2013 and its US bank Allfirst 15 years ago. Mr Byrne said any return to international expansion will be reviewed in the next three years or so.

“I think for now and the next number of years, two to three years, we’ll be continuing to do what we’re doing at the moment,” he said.

“For now it’s really about efficiency in what we’re doing, but beyond the three-year horizon we’ll come back and talk about that later,” he said.

Despite the remaining high level of State ownership, Mr Byrne told Bloomberg that the bank is run devoid of any government interference.

“We run the business very commercially on our own,” he said.

“The board is totally responsible for the day-to-day strategic direction of the company”.


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