AIB buyback hit by Allfirst shares

THE positive impact of AIB Bank’s €540m buyback of 40.5 million shares this year on earnings per share will be severely diluted by the introduction of €16 million formerly held in trust for Allfirst staff.

AIB went on the share buy-back spree after it got €900 million in cash following the sale of troubled subsidiary Allfirst to M&T Bank. Allfirst was sold in the fall-out from the Rusnak rogue trader disaster which resulted in trading losses of €691 million over a five-year period.

The emergence of the 16 million shares previously held in trust for Allfirst staff compensation plans has resulted in NCB Stockbrokers banking analysts John Kelly and David Odlum saying that, despite the positive nature of AIB’s trading statement last week, they are downgrading earnings per share (EPS) forecast: “Despite this good performance, we are downgrading our ‘clean’ EPS estimates by 6% in both 2003 and 2004 to 116.1c and 125.2c (from 123c and 133.1c), which is disappointing. Half of the downgrade comes from currency translation (not a surprise given movements in the USD and STG) while the other half relates to additional shares in issue relating to employee compensation plans (not previously highlighted).”