AIB shareholders vote to buy back €1bn taxpayer stake

Earlier this year, AIB and Finance Minister Michael McGrath agreed to a deal that would see AIB buy over €1bn of shares from the State as the Government continues to reduce its stake in the bank.

The Irish State’s shareholding in the bank currently stands at 37.99pc, meaning it had the biggest vote on the proposed transaction. It will now drop to 32.9pc.

Today's News in 90 seconds - 2nd May 2024

The State is set to receive €1bn from this transaction, as well as dividends of €273m which are due to be paid by AIB in May.

In response to questions from shareholders, group company secretary Conor Gouldson said the move would “repay the State’s support during the financial crisis” and advance the return to private ownership.

AIB also faced a number of challenges from shareholders at the meeting, while property losses also dating back to the financial crisis were behind a protest held outside the company’s Dublin city HQ.

The protest, which was made up of around 60 people, was organised by investors in the controversial Belfry funds.

AIB sold a series of speculative investments in UK commercial properties, known as the Belfry funds, between 2002 and 2006.

Belfry Investment Fund 1 realised a significant return of around 250pc but the five later funds generated losses due to the global financial crisis and the downturn in the property market.

The failure of the funds to make returns left investors suffering significant losses, with around 2,500 customers investing in the funds at the time.

It is understood that AIB set aside €233m to compensate investors, with repayments of €207m made to date. Review outcomes and payments have been communicated to 99.8pc of investors after a case-by-case review launched in 2021, the bank said.

"We’ve come here this morning to highlight the inconsistencies and unfairness of the bank’s approach to dealing with Belfry five and six,” Peter Ryan, head of debt advisory at CKS Finance, a small Dublin-based advisory firm, said outside the company’s head office.

"We know there’s been between 25pc and 30pc of investors in Belfry five and six that have been refunded,” he said, adding many of those impacted feel there is “no consistency and logic” to the compensation.

“These guys are here for the long run and they want to make sure they’re treated fairly like their co-investors were,” he said.

In response to a related shareholder question inside the meeting, Mr Gouldson said that the documentation was “very clear” on the high-risk nature of Belfry five and six.

“Upon review, we found we did not make the level of risk involved in investment sufficiently clear in Belfry funds two to four,” he said.

Brendan Burgess, a consumer advocate and founder of the consumer forum askaboutmoney.com, also called on the bank’s board to join him in wearing a black armband to remember those impacted by the tracker mortgage scandal.

"I’d like for you to join me in wearing black armbands to remember the damage that you’ve done because I’m really concerned that you will progress over the next few years and you will forget about this very important issue,” he said. “It’s not a legacy issue for the people who were affected by it...while people are still on the board who did not shout stop.”

In response, chairman Jim Pettigrew said the bank had apologised for the “stress” it caused on a number of occasions.

He said the bank is now focused on “walking the talk”, with the board passionate about putting the customer first.