Bank will apply to High Court to simplify capital structure

AIB will apply to the High Court to simplify its share capital structure, it told shareholders at an extraordinary general meeting (EGM) yesterday.

Each AIB share of one cent will be sub-divided into one new ordinary share of a quarter of one cent nominal value and one deferred share of three quarters of one cent nominal value.

These deferred shares will have no value and AIB will apply to the High Court to acquire these shares for nil consideration. The bank will then cancel these deferred shares and transfer an amount equal to the aggregate nominal amount of the deferred shares to the bank’s capital redemption reserve.

AIB will create €5bn in distributable reserves by applying to the High Court to reduce the share premium account by €1.074bn and reduce the capital redemption reserves by €3.926bn.

Each AIB shareholder will retain a proportionate interest in the bank after the reorganisation of the share capital. “The nominal value of each ordinary share will change, but the rights attaching to the new ordinary shares will be identical in all respects to those attaching to the existing ordinary shares.”

As it stands, AIB has a very unwieldy capital structure. It has 521 billion ordinary shares in issue, which gives it a current market capitalisation of roughly €52bn.

Chairman David Hodgkinson said AIB continues to meet strategic priorities and returned to pre-provision profit over the first quarter. Legal letters had been sent to 6,600 AIB mortgage customers in arrears.

Mr Hodgkinson said half of these customers had now engaged with the bank and are in negotiations about restructuring payments. Roughly 10-15% of customers had paid the entire amount of capital and interest in arrears once they had received legal letters, he added.