In­vestors in despair over AIB shares’ value

The Pak Banker - - Company& -

DUBLIN: Politi­cians, busi­ness­men, churches, char­i­ties and pen­sion­ers who lost mil­lions in the col­lapse of AIB shares will never re­cover those losses, given the bank's ef­fec­tive na­tion­al­i­sa­tion.

Govern­ment sources have con­firmed that the failed bank, which would not have sur­vived un­til the New Year un­less the tax­payer stepped in, is un­likely ever to re­cover its for­mer prime po­si­tion and looks set for a fire sale at the ear­li­est op­por­tu­nity.

Fol­low­ing Thurs­day's High Court ap­proval for ad­di­tional State fund­ing of €3.7bn, Fi­nance Min­is­ter Brian Leni­han, on be­half of the tax­payer, now ef­fec­tively owns 93 per cent of the bank. To date, tax­pay­ers have now put €14.1bn into AIB.

Since Thurs­day, the bank has moved to re­as­sure share­hold­ers that the delist­ing of the bank from the Ir­ish Stock Ex­change and move to the En­ter­prise Se­cu­ri­ties Mar­ket will not af­fect their value.

How­ever, be­hind t he scenes there is lit­tle be­lief that given the lat­est bailout, the fur­ther need for at least an­other €6.1bn in Fe­bru­ary and the forced sale of over­seas as­sets, AIB's shares will ever re­cover.

The Church of Ire­land, politi­cians in­clud­ing Richard Bru­ton, Mary Har­ney and Ned O'Ke­effe, and for­mer AIB chair­man Der­mot Glee­son are among those who have lost most af­ter the col­lapse in the bank's share value to 32 cent on Thurs­day.

The Church of Ire­land is nurs­ing one of the biggest losses af­ter its €17.3m in­vest­ment plum­meted to just over €260,000 in the wipe­out.

Mr Glee­son is also nurs­ing a huge fi­nan­cial loss on his 400,000 bank shares, which were once worth as much as €6m but have plunged in value to just €140,000.

"Be­ing hon­est, there will be no way such losses in­curred by many high-pro­file peo­ple and in­sti­tu­tions can ever be re­couped, it's a sad day for any­one con­nected with AIB," one se­nior di­rec­tor told the Sun­day In­de­pen­dent.

As a re­sult of the new cash in­jec­tion, ex­ist­ing share­hold­ings have been mas­sively di­luted, and given the bank's delist­ing from the Ir­ish Stock Ex­change, those who have lost heav­ily will un­likely ever re­cover.

Added to this is the an­tic­i­pated fur­ther in­jec­tion of €6.1bn of tax­pay­ers' money in Fe­bru­ary, which will push up state own­er­ship to over 95 per cent. Of even greater con­cern are the wide-rang­ing pow­ers which have been as­sumed by Mr Leni­han and the new rules that say that the tax­payer's in­ter­est is pri­ori­tised over those of share­hold­ers.

"The board has a new and spe­cific duty to have re­gard to the pub­lic in­ter­est.

The pub­lic in­ter­est must pre­vail if that pub­lic in­ter­est con­flicts with the best in­ter­ests of the bank," the new leg­is­la­tion states.

Mr Leni­han said AIB would not have sur­vived with­out the Govern­ment's ac­tion yes­ter­day.

"We wouldn't have had AIB on Jan­uary 1 if this in­vest­ment wasn't made," he said. AIB's board said in a state­ment that it be­lieved that the money was "crit­i­cal for the con­tin­ued ac­tiv­i­ties of the com­pany".

AIB said it was con­sid­er­ing a vol­un­tary deal seek­ing to share losses with sub­or­di­nated bond­hold­ers. - PB News

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