gov - Notes to Editors - Bank of Ireland trading plan

The long standing Government Policy of the State not being a shareholder in Ireland’s leading banks is unchanged. The Government believes that banking is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes.

A total of €29.4bn was invested in AIB, BOI and PTSB over the period 2009 to 2011. To date, €19.2bn has been recovered in cash by way of disposals, investment income and liability guarantee fees. The remaining investments in these three banks are currently valued at c. €5.3bn leaving a gap of c. €4.9bn.

In the case of Bank of Ireland, the State has already recorded a cash surplus to date with €5.9bn having been generated as against the €4.7bn originally invested in the bank. At the commencement of the Trading Plan, the State’s remaining equity stake in the bank is valued at close to €700m.

Table 1: State investments in AIB, BOI and PTSB

	AIB	BOI	PTSB	Total
	€m	€m	€m	€m
Total invested	20,751	4,667	3,954	29,372
Sale/redemption proceeds	7,112	3,597	1,891	12,599
Investment income	1,728	784	120	2,633
CIFS/ELG	1,783	1,547	669	3,998
Net cash position - In/(out)	(10,128)	1,261	(1,274)	(10,141)
Market value of equity stakes	4,232	676	382	5,290
Net position - including valuations	(5,896)	1,937	(893)	(4,852)

Trading plans are an effective, cost efficient method to sell down stakes in public companies, particularly when that stake is relatively small in percentage terms. For instance a trading plan strategy was successfully used by the UK Government when it sold down its remaining 24.9% stake in Lloyds Bank over the period 2014-16.

The Minister has instructed Citi to target that up to, but no more than, 15% of the expected aggregate total trading volume in the bank is to be sold over the duration of the trading plan. This is to ensure that the State as seller does not disturb trading in the price of the shares on any given day. The number of shares sold each day will depend on market conditions, amongst other factors.

Updates on the State’s Bank of Ireland shareholding will be disclosed to the market, each time the shareholding falls through a percentage point threshold as is required by Stock Exchange and investment regulations i.e. below 13%, 12% etc.

The Minister cannot disclose any further details in relation to the plan as it would be detrimental to maximising value for the taxpayer. The number of shares sold, the average price achieved and the cash generated from the plan will be known once it has been completed. At the end of the period, the trading plan can be renewed at the Minister’s discretion.