AIB described as ‘phoenix rising from the ashes’

Stockbrokers Merrion Capital is convinced there is a resurgence in AIB, with analyst Ciaran Callaghan issuing a note entitled ‘Phoenix rising from the ashes’.

Mr Callaghan’s thesis is that the removal of the contingent convertible notes (CoCo) from AIB’s balance sheet and the paying off of the Nama senior bonds will leave the bank as a prime candidate for investors.

“Given the high (10%) coupon on AIB’s €1.6bn CoCo coupled with the net interest margin (capital contribution) drag, the notes represent an inefficient form of capital in the current environment. Therefore, AIB’s viability and earnings capacity would be significantly enhanced if the group was allowed to retire these instruments over coming months, in our view,” he said.