Michael McGrath (Cork South Central, Fianna Fail)
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192. To ask the Minister for Finance if he will address a matter raised in correspondence (details supplied) on the possible initial public offering of a bank. [24280/17]

Michael Noonan (Limerick City, Fine Gael)
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The 2015 capital reorganisation at AIB resulted in a number of changes to the shareholding structure. Principal among these was the consolidation of shares as well as the redemption and conversion of the State’s Preference Shares. As you know, AIB had in excess of 523 billion Ordinary Shares in issue (increasing to around 678 billion as a result of the conversion) which was extraordinarily high for a public company.

All shareholders on the register of members of AIB as at the ‘Ordinary Share Consolidation Record Time’ received one New Ordinary Share for every 250 Ordinary Shares held, rounding up where the number of shares owned was not divisible by 250. The Ordinary Share Consolidation assisted in reducing AIB’s share price volatility and brought the bank’s share count back to levels more typical of a stable corporate entity. The Ordinary Share Consolidation was structured so that it did not result in the removal of any shareholder from the register of members of AIB and the rounding up process ensured that no shareholder was disadvantaged.

The part conversion of Preference Shares into equity had the effect of diluting other holders of Ordinary Shares, such that their stake in AIB was reduced. The State acquired its new ordinary shares at the estimated fair market value of AIB at the time. The conversion price (pre-consolidation) was set at 1.7c per share which was agreed as fair and reasonable by the Board of AIB having consulted with their ESM advisor. All shareholders in the bank were asked to vote on the proposed transaction at the EGM on the 16th December 2015. As you will recall, most of the value of AIB's shares was wiped out during the financial crisis, when the State was required to intervene to rescue the bank.

As part of the preparation for a potential IPO of AIB, I am planning to include an offering to retail investors. The structure of the retail element will be informed by previous privatisations and the changes in the regulatory environment for retail investors in recent years. As such, there will be no active marketing of the shares and the minimum required order size will be €10,000. Eligible retail investors will be able to purchase shares on exactly the same terms as institutional investors. My Department will provide more information on what private investors will need to do to participate in the retail offer at the appropriate time.

Finally I would strongly encourage any prospective retail investors to take appropriate independent financial advice before making any investment decision given the risks associated with investing in an equity instrument.