Michael McGrath (Cork South Central, Fianna Fail)
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79. To ask the Minister for Finance the reason the State will not retain the remaining Allied Irish Banks preference shares until their maturity date in 2019, after the forthcoming partial redemption of preference shares; and if he will make a statement on the matter. [39975/15]

Michael McGrath (Cork South Central, Fianna Fail)
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80. To ask the Minister for Finance the current number of ordinary shares the State owns in Allied Irish Banks; the proportion of company shares this represents; the number of shares it will own after the forthcoming capital re-organisation; the percentage ownership of the company this will represent; and if he will make a statement on the matter. [39976/15]

Michael McGrath (Cork South Central, Fianna Fail)
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81. To ask the Minister for Finance his views that the converting of €2.67 billion of preference shares in Allied Irish Banks into ordinary shares will delay the payback to the State of its investment in the bank, as the State is forgeoing an annual dividend of €180 million on these shares; and if he will make a statement on the matter. [39977/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 79 to 81, inclusive, together.

The Ireland Strategic Investment Fund (ISIF), currently holds approximately 522 billion Ordinary Shares in AIB on behalf of the Irish state. This represents approximately 99.83% of the total Ordinary Shares in issue. The forthcoming capital reorganisation will see the conversion of €2.14 billion of 2009 Preference Shares into €2.67bn worth of newly issued Ordinary Shares. The exact number of Ordinary Shares to be issued is currently the subject of discussion between officials of my Department and the bank. A current and fair calculation of the bank's underlying value will form the basis of this discussion. Therefore it is too early to give a precise number of Ordinary Shares that the State will receive, though given that the State currently owns such a high proportion of the Ordinary Shares, the percentage ownership of the company will not change materially.

The State's 2009 Preference Shares are a perpetual instrument and there is therefore no predetermined maturity date - they are repayable at the option of AIB subject to the bank having sufficient capital and also receiving regulatory approval. The SSM approval for a redemption of €1.36 billion of the Preference Shares for €1.7 billion is conditional on the conversion of the remainder to Ordinary equity. This is a mutually beneficial arrangement which allows the State to begin monetising its investment in the bank while allowing AIB to normalise its Balance Sheet. The conversion of Preference Shares into Ordinary Shares does not in any way delay the return of capital from the State's investment in AIB, rather the opposite is the case. Conversion of a portion of the Preference Shares fast tracks the bank's ability to remunerate and redeem State aid through the bank's own cashflow and also opens up the possibility of the State monetising some of its equity investment through a sale process in the future.

The conversion and redemption will bring to an end the annual payment of dividends on the Preference Shares. However it is important to note that the State will retain 99.8% ownership of AIB into the future and following this capital reorganisation we are confident that the bank will be capable of resuming ordinary dividends in the future helping to replace this lost income. The future payment of these dividends is a matter for the Board of AIB and their regulator and given the fiduciary and regulatory obligations involved I cannot be specific about the exact timing and quantum that might be involved.