merrion street

The Minister for Finance, Michael Noonan T.D., this morning has welcomed the receipt of €1.76 Billion to the State following the repayment of the Contingent Capital Note (‘CoCo’) by AIB. The CoCo was issued by AIB in July 2011 with a set five year maturity, and the instrument matures today 28th July 2016. AIB have therefore returned the full capital value, plus accrued interest of €160m, to the exchequer.
Commenting on the repayment, Minister for Finance Michael Noonan T.D. said:
“This morning I welcome the repayment of €1.76bn to the State relating to the redemption of AIB’s CoCo, as well as the associated interest payment. This return of capital to the State is part of an important process to recoup taxpayer’s money used to bailout the bank, and to continue reducing our national debt to a more sustainable level. The redemption of this capital note removes the final legacy instrument of the financial crisis from the balance sheet of AIB, and re-affirms the bank’s substantial progress in returning to normal operations. It also underlines its commitment to fully repaying the capital invested by the State.”
“Today also sees the release of AIB’s financial results for the first half of 2016, and I would like to commend the bank’s management and board on AIB’s continued profitability and its significant lending into the Irish economy.”

Notes to Editors
What payments will the State receive from AIB?
Payments to be received from AIB this week are the following:
€1,600m Capital Receipt from Maturation of AIB Contingent Capital Note
€160m Accrued Interest arising from AIB Contingent Capital Note

Why is AIB making this repayment now, and what is its effect on the State’s shareholding?
The repayment of the CoCo’s full capital value, on the maturity date, 28th July 2016, is a contractual commitment that was written into the terms of the instrument. The interest payment of c.€160m is also part of the contractual terms of the instrument, and represents interest accrued since 27th July 2015.
There is no effect on the State’s shareholding as a result of this repayment. The redemption of the CoCo continues the process of AIB returning capital to the State and follows on from the 2015 capital reorganisation which allowed for the part redemption of the State's 2009 Preference Shares for €1.64 billion in cash for the State, while eliminating the EBS promissory note. Following the CoCo redemption, the bank, which has been capital generative since 2014, will have a normalised balance sheet structure. The State continues to own 99.9% of AIB’s equity, in the form of ordinary shares.