The Irish Times reported on Friday that AIB was planning to offer to buy out thousands of legacy shareholders with tiny holdings after their stakes were severely diluted by the bank’s crisis-era bailout.
However, it is not alone. PTSB is planning something similar. Both are proposing resolutions at their upcoming annual general meetings to allow them to launch so-called odd-lot offers.
AIB is seeking to buy out holders of 20 or fewer shares. They account for almost 90 per cent of the bank’s 75,000 shareholders by number but only hold 0.01 per cent of the company combined.
It would cost the bank a little over €100 to buy 20 shares — including a 5 per cent premium it plans to offer as an incentive. If such shareholders — or, in many cases, the estates of deceased investors — were to sell their stock in the market, broker fees would wipe out any proceeds.
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Twenty AIB shares — the equivalent of 5,000 shares back in the day, before the bank carried out a large share consolidation in 2015 — would have been worth almost €120,000 back in 2007 when AIB’s share price peaked.
Of course, these legacy investors were wiped out more than a decade ago when the Government bailed out AIB. However participating in a repurchase would finally crystallise these losses, even if they could be used to offset investment gains elsewhere for tax purposes.
PTSB, which also needed a taxpayer rescue during the crisis, is plotting to remove as many as 128,000 shareholders from its register as it aims to offer to buy out holders of 100 or fewer shares. These account for 99.5 per cent of its investors but represent, in aggregate, less than 0.12 per cent of all its shares.
Holders of 100 shares would receive about €165 at current prices (including a 5 per cent premium). However, these would have equated to 10,000 shares before the bank swapped every 100 of shares in the issue almost a decade ago for one new share.
Shares in PTSB, then known as Irish Life & Permanent, peaked at €22.45 in February, 2007. The equivalent of 100 shares today would have been worth €224,500 17 years ago.
