The anticipated return to the stock market this year of Allied Irish Banks could yet fall victim to the vagaries of Irish politics, nearly seven years after its €21bn bailout at the height of Ireland’s financial crisis.
Announcing its 2016 financial results on Thursday, Ireland’s biggest high street bank measured by customer numbers and branches said it was “now ready for an IPO, when market conditions permit and the [finance] minister decides.”
The Irish government has targeted a listing on the stock market this year – perhaps as early as the second quarter. Michael Noonan, the finance minister, said the financial results for 2016, which showed a fall in pre- tax profit to €1.7bn (from €1.9bn), “confirm the view that 2017 represents an appropriate time to consider an initial public offering of AIB.”
However, asked whether the likely departure of prime minister Enda Kenny – which could see a shake-up of ministerial posts and perhaps even a general election – would affect the timing of any IPO, AIB chief executive Bernard Byrne said: “That’s a very good question.”
Mr Kenny is expected to announce in the next few weeks that he will step down as leader of Fine Gael, the centre-right governing party he has led for 15 years. That will create a vacancy in the Taoiseach’s office – a race to succeed him is now under way inside the party.
Mr Kenny’s departure may be followed by that of Mr Noonan, the veteran finance minister who has been eyeing the stock market return of AIB as a key part of his legacy. A new finance minister may take up the running on the IPO, which would be a strong signal to foreign investors that Ireland’s financial crisis was well and truly behind it.
Yet if the prime ministerial change triggers a general election, it could affect the timing of the IPO – and a new government may be less wedded to the move than Mr Kenny’s minority administration.
Mr Byrne said the timing of the IPO was a matter for the government.
He argued that the bank had done its own bit to ensure it was ready for such a step – returning consistently to profit, strengthening its capital base, and restoring the image of its franchise in the eyes of the Irish public, which still nurses grievances against bankers for the crisis of 2008 to 2010.
“We’re comfortable with the things we can control” in relation to the IPO, Mr Byrne added.
AIB sweetened its message to the government with the announcement that it would pay a €250m dividend to its shareholders – which includes the Irish state with a 99.9 per cent stake. The move makes it the first Irish bank to pay a dividend to shareholders since the crash.
“The board has been trying to get to the point where recommending that a dividend be paid was the right thing to do, and we are now at that point,” Mr Byrne said.