Officials warned AIB share sale would reignite senior banker pay debate

State's shareholding in the bank has dropped below 50%

The state ended up selling a significant chunk of its AIB shares in late June yielding €480.5m.

Department of Finance officials have flagged concerns that the latest sale of AIB shares which would leave the state shareholding below 50% would reignite debate over restrictions on pay for senior bankers there.

Civil servants have told Finance Minister Michael McGrath the state having a minority share in the bank would mean little in practical terms, but would be seen as a significant milestone.

A submission on the latest stage of Project Viking, the selling down of the state’s stake in AIB, stated: “Such an outcome will garner media attention as there is now a strong perceived link with possible further changes in remuneration restrictions.

“This is something the minister may wish to consider. However, we would not wish such considerations to delay any share sale if conditions are right.” The state ended up selling a significant chunk of its AIB shares in June yielding €480.5m and reducing its shareholding in the bank from 51.9% to 46.9%.

Officials said the €3.64 per share price was the “highest we believed we could push investors without losing significant orders” according to a post-sale briefing for the finance minister.

They said that there had been strong demand from investors and that in the aftermath, AIB shares had traded in a range that the Department of Finance was happy with at 2.5% to 3.85%.

They said investors needed to see the stock “trade higher immediately” after such a sale, but that the department had not wanted it to go any higher than 4%.

The submission also stated how even though the state’s share of AIB had reduced further, the Exchequer was still sitting pretty in terms of the value of what was left.

“While the State’s shareholding in AIB has reduced since the beginning of 2022, the value of our shareholding today is €504m higher than at the start of the year given the upward trajectory of AIB’s share price over this period,” the submission stated.