AIB's executive chairman Dan O'Connor has told shareholders the Government is likely to take a stake of 16% or 17% in the bank next month. The shareholding will be in place of a dividend owed to the Government by the bank.
However, it is expected that the Government's stake in the bank could go as high as 60% later in the year.
The Government received preference shares worth €3.5 billion in AIB last year as part of its recapitalisation programme. AIB is due to pay dividends on these next month, but the EU has blocked banks who receive State aid from making cash payments. This will force AIB to give the Government shares instead of cash.
The State was forced to take a 15.7% stake in Bank of Ireland earlier this year for the same reason.
Mr O'Connor has acknowledged to shareholders that its financial performance last year was 'highly unsatisfactory'. He told the bank's AGM in Dublin that most of the bank's problems were self-inflicted, as it lent too much money to the property and construction sector in recent years.
AIB is planning a series of measures to meet financial targets set out by the Financial Regulator - including the sale of some overseas businesses.
The Government has committed to providing extra funds if these measures are not enough. Mr O'Connor said the size of the Government's final stake would become clearer in the coming months after AIB implemented its plans.
He said the bank was still discussing its restructuring plan with the EU, but had not yet received a date for a final decision.
Mr O'Connor told the meeting the bank's performance so far this year was 'broadly in line with our expectations' in what continued to be very tough conditions.
AIB staff worried about their future, AGM told
IBOA General Secretary Larry Broderick has urged AIB to reconsider its decision to sell off its subsidiaries in Northern Ireland and the UK.
In an unprecedented address to the bank's AGM, Mr Broderick said that while staff in First Trust Bank in Northern Ireland and AIB in Britain were not only anxious about their own futures, but also worried at the potential impact of any sell-offs on their customers.
He also questioned the wisdom of trying to dispose of the two divisions at a time when market conditions were so poor that the bank was unlikely to realise the full economic value of the businesses.
Mr Broderick also spoke of the growing unease of staff throughout the AIB Group. He said that despite making considerable financial sacrifices as well as enduring abuse from customers and the public over the actions of senior management, ordinary bank workers were worried that their jobs could be in jeopardy in any future attempt by management to restructure AIB.
AIB shares closed 0.7% lower at €1.44 in Dublin this evening.
