Government cuts value of AIB by modest €900m

The Government has cut the value of AIB by a modest €900m, in a move that may signal it still eyes selling a stake in the lender at the first opportunity.

The timing of any shares sales, which could happen as early as May or June, may be influenced by the timing of the leadership contest for Fine Gael and a possible ensuing early election.

The Ireland Strategic Investment Fund holds the stakes Government owns in the banks that were rescued during the financial crisis. 

It said it had valued the 99.9% ownership of AIB to €11.3bn, down from €12.2bn.

Late last year, analysts told the Irish Examiner that the valuation of AIB could be cut by billions of euro to reflect the torrid times for European banking stocks in 2016. 

Said stocks have since recovered somewhat on the pledge of President Donald Trump to boost US growth.

Darren McKinley, a senior analyst at Merrion Capital, said yesterday the new valuation appears to be another step that brings the sale of AIB shares closer.

In an analysis published last week, Investec Ireland said that AIB resuming paying out dividends — which would revert to its Government owner — should boost “public perception” of the returns the State is deriving from AIB.

The ISIF also cut the valuation of the 13.9% stake the Government owns in Bank of Ireland to €1.1bn from €1.5bn, a devaluation of over 26%, to reflect the market fall in the lender’s shares since an earlier valuation.

Separately, the Department of Finance has invited public submissions on the corporate tax regime. 

It follows the commissioning of economist Seamus Coffey as an independent expert to review the tax code last year. 

The consultation runs to April 3.


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