Extension of share sale gives state clear path to Bank of Ireland exit
Bank of Ireland is on track to return to full private ownership by next summer after the Finance Ministry extended the deadline for selling its stake from January to at least May 2022.
The longer time frame will give the National Treasury Management Agency, which manages the state’s investments in the bank, at least five more months to further reduce state participation.
At the rate of the current disposal plan, which began in June, the State will be able to completely exit its position by the middle of next year, thus putting an end to a decade of involvement in the bank.
“The monthly reduction of around 1 percentage point would take the state to around 3% provisional by the end of the extension period,” Eamonn Hughes, banking analyst at Goodbody, said in a note to clients.
“Maybe at this point it could continue with the plan or maybe such a stake would be manageable enough to be placed on the market. Either way, the plan’s extension feeds into our earlier suggestions that the state would likely have left the bank by the summer. “
This point of view was echoed by the Managing Director of the Bank of Ireland, Francesca McDonagh.
“The sale of outstanding shares is an important process in normalizing relations between the Irish state and the Bank of Ireland,” McDonagh said in a statement on Friday.
“We look forward to being the first Irish bank to return to full private ownership in 2022.”
The government’s removal from the Bank of Ireland’s shareholder register could ease competition concerns in the industry with the imminent departures of Ulster Bank and KBC Bank Ireland.
The Competition and Consumer Protection Commission is conducting an in-depth investigation into the Bank of Ireland’s takeover of KBC’s consumer banking business.
Senior industry sources expect similar investigations into Ulster Bank’s deals to sell its corporate, business and mortgage portfolios to AIB and PTSB, both of which are majority owned. by the state.
The proceeds from the sale of the shares so far – which has reduced the State Bank of Ireland’s stake from 13.9 to 9.3 percent – amounts to around € 249 million.
The government has now recovered almost € 6.2 billion in cash from its € 4.7 billion recapitalization of Bank of Ireland.