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AIB shareholders vote yes to NAMA as bank says more capital is needed
Allied Irish and other banks are examining ways to bolster capital depleted by losses on souring loans to property developers. The bank's shareholders at an EGM yesterday approved a resolution to join the National Asset Management, set up by the Irish government to clean up banks' balance sheets. NAMA will buy loans from lenders at an average 30% discount, reflecting a fall in land values over the past two years.
“We are currently exploring a number of ways to bolster our equity capital base through asset sales, the introduction of a strategic investor, and a public share issue which may require government support,” AIB Chairman Dan O’Connor told a shareholder meeting in Dublin yesterday. The government already has a 25% indirect stake in Allied Irish and rival Bank of Ireland Plc.
AIB expects to transfer loans with a book value of €24.2 billion to the bad bank, known as the National Asset Management Agency. O’Connor said today that there is “no reason” to think that the discount on Allied Irish loans will be “significantly” outside the 30% average for all institutions taking part in the government plan.
“There are no viable alternatives for raising that capital,” other than participating in NAMA, O’Connor said. It will “improve Allied Irish’s liquidity and funding position” and “restore confidence,” he said.
Allied Irish said today it is in ongoing talks with a potential strategic investor, without providing further details. On Aug. 14, Allied Irish said it received an approach from an unidentified third party seeking a minority stake and that no progress was expected in the “near term.” That statement followed a report by the Irish Times newspaper that an unnamed Canadian Bank had made an approach.
Allied Irish rose 12 cents, or 9.8 %, to €1.35 in Dublin yesterday. The stock has declined 22% this year after an 89% drop in 2008, giving the company a market value of €1.2 billion.
“We are currently exploring a number of ways to bolster our equity capital base through asset sales, the introduction of a strategic investor, and a public share issue which may require government support,” AIB Chairman Dan O’Connor told a shareholder meeting in Dublin yesterday. The government already has a 25% indirect stake in Allied Irish and rival Bank of Ireland Plc.
AIB expects to transfer loans with a book value of €24.2 billion to the bad bank, known as the National Asset Management Agency. O’Connor said today that there is “no reason” to think that the discount on Allied Irish loans will be “significantly” outside the 30% average for all institutions taking part in the government plan.
“There are no viable alternatives for raising that capital,” other than participating in NAMA, O’Connor said. It will “improve Allied Irish’s liquidity and funding position” and “restore confidence,” he said.
Allied Irish said today it is in ongoing talks with a potential strategic investor, without providing further details. On Aug. 14, Allied Irish said it received an approach from an unidentified third party seeking a minority stake and that no progress was expected in the “near term.” That statement followed a report by the Irish Times newspaper that an unnamed Canadian Bank had made an approach.
Allied Irish rose 12 cents, or 9.8 %, to €1.35 in Dublin yesterday. The stock has declined 22% this year after an 89% drop in 2008, giving the company a market value of €1.2 billion.
Thu, 24th Dec 2009