Shares in AIB have slumped by more than 30% in Dublin trade today as the bank finalises its capital reorganisation.
This is the second day of heavy losses in a row and and follows the announcement that the bank will consolidate its ordinary shares on a 1-for-250 basis. Shares in the bank yesterday closed 20% lower.
In an interim management statement yesterday, AIB said it had generated more capital, reduced its bad loans and increased its net interest margin in the third quarter.
It also said it had mandated dealers to look at raising debt to start repaying its state bailout.
A drop in the share price was not unexpected, and both the Government and the bank had warned that the shares were overvalued and would fall.
AIB said yesterday that it had increased its core tier one capital ratio by 90 basis points in the quarter under fully loaded Basel III industry rules, driven mainly by profits.
The bank got approval from European regulators earlier this month to repay €1.7 billion of state bailout funds and will repay another €1.6 billion next July when state-owned contingent capital notes (CoCos) mature.
As part of the agreement, AIB will issue at least €750 million of Lower Tier 2 (LT2) and €500m of Additional Tier 1 bonds.
It has mandated a number of banks to arrange investor meetings for today to look at issuing the Tier 2 bond.
Its shares will be valued at around €11.7 billion after the capital reorganisation, which Finance Minister Michael Noonan said represented a 15% increase from the end of 2014 when the funds due to be repaid to the state were counted as part of the valuation.
The Government expects to recoup more than it invested in the bank over a number of years and, if re-elected early next year, has said it plans to sell a 25% stake on the stock market.
See how AIB shares are trading on the Irish Stock Exchange here.
