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Noonan says bank valuations rising as required for AIB IPO

Rising bank share prices suggest the Government may get the kind of value required to sell a 25% stake in AIB this year, Finance Minister Michael Noonan has said.

The likely timetable for partially cashing out the state’s €21 billion investment in the bank was pushed out to 2017 from 2016, with Mr Noonan citing unfavourable market conditions. AIB is 99% state-owned.

Michael Noonan reiterated that he was not under any time pressure to kick off an initial public offering but noted a recovery in the value of bank shares, which he partly attributed to investors anticipating rising interest rates.

“There has been a recovery in recent months. For example, Bank of Ireland and Permanent TSB are now trading well above lows experienced in 2016. Bank of Ireland has appreciated by 52% and PTSB by 81%,” Mr Noonan told the Dáil.

“Certainly there’s an indication that we might get the kind of values we would require but there are a number of events that would be necessary before we proceed, the issue of a dividend, obviously that would probably enhance value somewhat and then there’s the annual returns of AIB which are due out in March,” the minister added.

Shares in 14% state-owned Bank of Ireland are still almost 40% below their post-financial crisis high reached in 2015 while the smaller, 75% government-owned PTSB is also shy of its 2015 IPO price.

AIB, the country’s second-largest bank by assets, is in discussions with regulators over starting to pay a regular dividend to the state, which its chief financial officer said it believed it was absolutely in a position to do.

Bank of America Merrill Lynch, Deutsche Bank and Davy Stockbrokers were appointed last month as the global coordinators for the potential sale of a stake in the bank.

Asked when he believed an opportune time would come to assess the potential for an IPO, Mr Noonan presented two possibilities for this year.

“There’s a window some time from late May through June and then there’s another window in the autumn. So one or the other,” the minister said.

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