The State will have a 99.8% shareholding in AIB after an agreement with the Government aimed at ensuring the bank meets capital targets set by the Central Bank. The State currently has around 93%.
Under the arrangements, AIB will issue €5 billion worth of shares to the National Pensions Reserve Fund. It will also issue contingent capital notes of €1.6 billion, which can be converted into shares if AIB needs further capital.
After the completion of its merger with EBS today, AIB needs to raise a total of €14.8 billion by July 31. AIB and EBS both plan to raise money by imposing losses on subordinated bondholders.
AIB said the Minister for Finance had indicated that any further money needed by AIB would be injected once he was satisfied that an appropriate amount had been raised from subordinated bondholders. No new shares will be issued by AIB if tis further capital is required.
AIB is to hold a special meeting of shareholders to consider the issue at Bankcentre in Dublin on Tuesday July 26 at 10am.
AIB today completed the acquisition of EBS, after Finance Minister Michael Noonan announced on March 31 that the two institutions were to be merged to form one of two 'pillar' banks in a restructured Irish banking sector.
The new EBS entity will be called EBS Limited, which will operate as a separately branded subsidiary of AIB with its own branch network.
Every share account in, and deposit with, EBS Building Society will become a deposit of the same amount with the new EBS entity. AIB said EBS customers could continue to carry out their business as usual.
EBS Limited's executive directors will be Fergus Murphy and Emer Finnan. Mr Murphy, who was EBS Building Society's chief executive, will join AIB's executive committee.
EBS Limited's non-executive directors will be current EBS chairman Philip Williamson and Jim Ruane. They will be joined by AIB non-executive director Catherine Woods and AIB executives Bernard Byrne, Eamonn Hackett and Denis O'Callaghan.
AIB also said today that the €100,000 deposit guarantee scheme protection would apply to EBS and AIB customers separately. The Eligible Liabilities Guarantee Scheme (ELG) guarantees all deposits in the participating institutions over the €100,000 limit.
Fund agrees to settle AIB bonds case
A settlement has been reached between the State and an investment fund called Aurelius Capital Management, which had sued over the terms of a High Court order which imposed heavy losses on subordinate bondholders in AIB.
The terms of the settlement are to remain confidential. Another investment fund dropped its action against the state last month.
The effect of today's settlement means the Subordinated Liabilities Order made by the high court on April 14, stands, as only two bondholders sought to prevent the order being implemented and both of those bondholders have now withdrawn their actions.
The legal orders to impose losses on subordinate bondholders in the banks is part of a Government-ordered operation to save taxpayers around €5 billion of the estimated €24 billion required to recapitalise the banks.
The state has €17 billion of its own money available for the recapitalisation. If it can close the remaining €2 billion gap through sale of assets such as Irish Life and further private sector fund-raising, notably Bank of Ireland's current rights issue, then it may not have to use any EU/IMF funds for bank recapitalisation.
