Embargo 07.00 30th November 2009
AIB - Proposed participation in the National Asset Management Agency
bank asset acquisition programme
Allied Irish Banks, p.l.c. ("AIB") [NYSE: AIB] ("AIB" or the
"Company") today announces its intention to participate in the
National Asset Management Agency ("NAMA") bank asset acquisition
programme in Ireland (the "NAMA Programme"). Participation in the
NAMA Programme is subject to approval by shareholders at an
Extraordinary General Meeting to be held at 11.00 a.m. on 23 December
2009. This will be done by an ordinary resolution and a vote in
favour by shareholders would authorise the Company to proceed with
the participation in the NAMA Programme on the terms contained in the
NAMA Act.
Highlights
* Under the NAMA Programme, NAMA will acquire
"eligible bank assets" (the "NAMA Assets") from AIB, which will
include performing and non-performing loans. NAMA has not yet
identified which of AIB's loans it intends to acquire under the
NAMA Programme. AIB estimates that NAMA will acquire from AIB land
and development loans and certain associated loans with an
aggregate value of approximately ¤24.2 billion on a gross loan
basis (i.e. before taking account of ¤2.3 billion of loan loss
provisions as at 30 June 2009), based on assumptions outlined in
the shareholder circular being posted to shareholders of the
Company today (the "Circular") and set out at the end of this
announcement (the "Assumptions").
* The NAMA Assets will be valued on a
loan-by-loan basis, using the valuation methodology specified in
the National Asset Management Act 2009 and in the associated
regulations. The Minister for Finance has provided guidance that an
average industry discount of 30 per cent. to the gross value of the
NAMA Assets has been estimated, although there can be no assurance
that this will be the case. In the Board's view, there is no
reason to believe that the average discount applicable to AIB's
NAMA Assets will fall significantly outside of this guidance.
* The consideration for the NAMA Assets to be
acquired by NAMA from AIB will comprise the issue to AIB of bonds
and subordinated bonds equal in value to the purchase price of
those assets. The Company intends to retain the bonds and
subordinated bonds and use them as a source of further liquidity to
support its business activities. It is expected that the
acquisition by NAMA of all of the NAMA Assets from all of the
participating institutions will be completed by July 2010 with the
first tranche expected to transfer in January 2010.
* Participation in the NAMA Programme will enable
AIB to sell certain land and development loans and associated loans
to NAMA and thereby determine the Group's losses associated with
those loans. It is expected that this will increase market
certainty because the NAMA Assets in general are perceived to carry
a higher risk than other classes of assets on the Group's balance
sheet.
* The Board believes that participation by AIB in
the NAMA Programme will underpin market confidence in AIB by
removing a key element of uncertainty and will generate the
following benefits: (i) it should enable AIB to gain greater access
to wholesale funding as counterparties become more comfortable with
the Company's risk profile; (ii) it should improve customer
confidence in AIB and should support the Company overall in
building a larger more stable deposit base; and (iii) it should
enhance the Company's ability, should it so decide, to access
capital, pursue the Company's strategy and improve the resilience
of the Group's balance sheet.
* Based on the Assumptions, AIB has estimated
that, on a pro forma basis as at 30 June 2009, participation in the
NAMA Programme would have reduced its core tier 1 capital ratio
from 8.5 per cent. to 6.3 per cent., its tier 1 capital ratio from
7.8 per cent. to 6.1 per cent. and its total capital ratio from
10.7 per cent. to 9.5 per cent.
* The NAMA Act is structured to require a
participant that wishes to apply to join the NAMA Programme to do
so at a point when it will not have certainty on: (i) precisely
which of its NAMA Assets will be acquired by NAMA; (ii) the number
of its assets to be acquired by NAMA; (iii) the price at which its
NAMA Assets will be acquired by NAMA; and (iv) the timing of the
transfer of its NAMA Assets to NAMA.
* The Board believes, if the resolution to
authorise participation in the NAMA Participation is not approved
by Shareholders, it would not be possible to put in place the
necessary levels of capital that would be expected by the market or
funding commitments in an acceptable time period to support and
reinforce confidence in AIB and, therefore, there is a very
significant risk that AIB will have to rely, to a greater extent,
on Government support to sustain its business. The terms of this
support are likely to result in partial or full nationalisation of
AIB.
Expected Timetable
Latest time and date for receipt of Forms of Proxy 11.00 a.m. on 21
for the Extraordinary General Meeting December 2009
Extraordinary General Meeting 11.00 a.m. on 23
December 2009
Expected date of completion of the transactions by July 2010
constituting participation in the NAMA Programme(1)
Note:
(1) It is expected that NAMA Assets will be transferred to
NAMA in a series of transfers. The expected completion date indicated
above refers to the transfer of the last of the NAMA Assets to NAMA,
as indicated by the NAMA draft business plan dated 13 October 2009.
Extraordinary General Meeting
An Extraordinary General Meeting is being convened by the EGM Notice
set out at the end of the Circular to consider and, if thought fit,
pass the resolutions. The Extraordinary General Meeting will take
place at 11.00 a.m. on 23 December 2009 in Bankcentre, Ballsbridge,
Dublin 4.
Two resolutions will be proposed at the Extraordinary General
Meeting. The first resolution will be proposed as an ordinary
resolution and concerns the approval required to enable AIB to
participate in the NAMA Programme. The second resolution, which will
be proposed as a special resolution, is not related to participation
in the NAMA Programme and will, if approved, enable the Company to
convene certain meetings of Shareholders on 14 days' notice.
Due to the size of the transaction relative to AIB's market
capitalisation, participation in the NAMA Programme constitutes a
"Class 1 transaction" under the Listing Rules of the Irish Stock
Exchange and the Listing Rules made by the UK FSA under Part VI of
the Financial Services and Markets Act 2000 of the United Kingdom, as
amended, (the "Listing Rules"). In addition, participation in the
NAMA Programme is treated as a "related party transaction" under the
Listing Rules. As a consequence, the Listing Rules require that
participation in the NAMA Programme may only be implemented if it is
approved by the Company's shareholders. The National Pensions Reserve
Fund Commission, which is regarded as an "associate" of the Minister
for Finance under the Listing Rules and which holds ordinary shares
in the Company, has undertaken not to vote on the resolution
regarding NAMA and to take all reasonable steps to ensure that its
associates (if any) will not vote on that resolution.
Documentation
The Circular, including the EGM Notice convening an Extraordinary
General Meeting of AIB to be held at 11.00 a.m. on 23 December 2009
at Bankcentre, Ballsbridge, Dublin 4, will be posted to shareholders
today.
A copy of the Circular will shortly be available to download from the
Company's website: www.aib.ie/investorrelations.
A copy of the Circular will also shortly be available for inspection
at the following locations:
1. Allied Irish Banks, p.l.c.
Bankcentre
Ballsbridge
Dublin 4
Ireland
Tel.: +353 1 660 0311
2. Company's Announcement Office
Irish Stock Exchange
28 Anglesea Street
Dublin 2
Ireland
Tel.: +353 1 617 4200
3. Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
United Kingdom
Tel.: +44 207 066 1000
4. McCann FitzGerald
Riverside One
Sir John Rogerson's Quay
Dublin 2
Ireland
5. Linklaters LLP
One Silk Street
London
EC2Y 8HQ
United Kingdom
Enquiries
For further information, please contact:
Alan Kelly Catherine Burke
General Manager, Group Finance Head of Corporate Relations
AIB Group AIB Group
Dublin 4 Dublin 4
Tel: +353-1-641 2162 Tel: +353-1-641 3894
This is not a circular or an equivalent document. Please read the
whole of the Circular, in particular the risk factors set out in the
Circular. You should not rely on any key or summarised information as
set out in this announcement.
This announcement does not constitute or form part of any offer or
invitation to purchase, otherwise acquire, subscribe for, sell,
otherwise dispose of or issue, or any solicitation of any offer to
sell, otherwise dispose of, issue, purchase, otherwise acquire or
subscribe for, any security. The contents of this announcement should
not be construed as legal, business, financial, tax, investment or
other professional advice.
Morgan Stanley & Co. Limited ("Morgan Stanley") is acting as sponsor
and financial adviser and AIB Corporate Finance Limited ("AIB
Corporate Finance") is acting as financial adviser to AIB in relation
to participation in the NAMA Programme. Morgan Stanley and AIB
Corporate Finance are acting exclusively for AIB and no one else in
connection with participation in the NAMA Programme and will not
regard any other person (whether or not a recipient of the Circular)
as their respective client in relation to participation in the NAMA
Programme and will not be responsible to anyone other than AIB for
providing the protections afforded to their respective clients or for
providing advice in relation to participation in the NAMA Programme
or any other matter referred to in this announcement. In particular,
the advice of Morgan Stanley referred to on page 19 of the Circular
has been delivered to the Directors for the purposes of their
obligations under the Listing Rules. It has not been delivered for
the benefit of anyone else, including any shareholder of AIB, and it
is not to be relied on by anyone other than the Directors for any
purpose whatsoever.
Apart from the responsibilities and liabilities, if any, which may be
imposed on Morgan Stanley by the Listing Rules, neither Morgan
Stanley nor AIB Corporate Finance accepts any responsibility
whatsoever and makes no representation or warranty, express or
implied, for the contents of this announcement or the Circular,
including its accuracy, completeness or verification or for any other
statement made or purported to be made by AIB, or on AIB's behalf or
by Morgan Stanley or AIB Corporate Finance, or on Morgan Stanley's or
AIB Corporate Finance's behalf, in connection with AIB or
participation in the NAMA Programme, and nothing in this announcement
is or shall be relied upon as a promise or representation in this
respect, whether as to the past or future. Each of Morgan Stanley and
AIB Corporate Finance accordingly disclaims to the fullest extent
permitted by law and under the Listing Rules all and any
responsibility and liability, whether arising in tort, contract or
otherwise, which it might otherwise have in respect of the Circular
or this announcement and any such statement.
This announcement contains "forward-looking statements", within the
meaning of Section 27A of the US Securities Act of 1933, as amended,
and Section 21E of the US Exchange Act of 1934, as amended, regarding
the belief or current expectations of AIB, AIB's Directors and other
members of its senior management about AIB's businesses and the
transactions described in this announcement, including statements
relating to possible future write-downs or impairments. Generally,
words such as "may", "could", "will", "expect", "intend", "estimate",
"anticipate", "believe", "plan", "seek", "continue" or similar
expressions identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance. Rather, they are based on current views and assumptions
and involve known and unknown risks, uncertainties and other factors,
many of which are outside the control of AIB and are difficult to
predict, that may cause actual results to differ materially from any
future results or developments expressed or implied from the
forward-looking statements. Factors that could cause actual results
to differ materially from those contemplated by the forward-looking
statements include, among other factors: developments in the current
crisis in global financial markets; the ability of AIB to access
sources of liquidity; the risk that AIB may have insufficient capital
resources to meet the minimum required by regulators; the possibility
of AIB requiring further goodwill impairments; the risk that
financial models determining the value of certain financial
instruments may change over time or turn out to be inaccurate and the
value realised by AIB for its assets may be materially different from
the current or estimated value; the financial stability of other
financial institutions, including AIB's counterparties; the
management of AIB's capital; the policies of various governmental and
regulatory authorities; limitations or additional requirements
imposed on AIB's activities as a result of participation in the NAMA
Programme, the CIFS Scheme, the ELG Scheme and the NPRFC Investment
(each as defined in the Circular); the risk that governmental
liability guarantee schemes may be revoked or changed; the credit
ratings assigned to AIB by rating agencies; the risk that AIB may not
participate in the NAMA Programme or that the NAMA Programme may turn
out to be unsuccessful in achieving its goals; the risk that AIB's
application to participate in the NAMA Programme may not be
successful; if AIB participates in the NAMA Programme, the lack of
control AIB will have over the nature, number and valuation of the
assets to be transferred to NAMA and the timing for the transfer of
those assets to NAMA; the risk that the value of associated loans
that NAMA acquires from AIB could be greater than the value
attributed to them in the Assumptions (as defined below); the outcome
of EU state aid clearances and reviews; the undertakings made by, and
restrictions placed on, AIB once an application has been made by it
to participate in the NAMA Programme; the risk that AIB may be
required to indemnify NAMA in respect of various matters; the
directions the Financial Services Regulatory Authority, as part of
the Central Bank and Financial Services Authority of Ireland (the
"Financial Regulator") may give in relation to AIB's future conduct;
the risk that the Minister for Finance may direct the Company to
implement a restructuring plan and/or a business plan in relation to
AIB's future conduct; the Company being required to provide such
services in respect of NAMA Assets as NAMA requests; compliance with
any guidelines issued by the Minister for Finance regarding lending
practices; and the risk that AIB may not recover the full value of
the subordinated NAMA bonds and that the Government may impose a
surcharge on the Company's profits.
No statement in this announcement is intended to constitute a profit
forecast or profit estimate for any period. The forward-looking
statements speak only as of the date of this announcement. Except as
required by the Financial Regulator, the Irish Stock Exchange, the
FSA, the London Stock Exchange plc or applicable law, AIB does not
have any obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, further events or
otherwise. AIB expressly disclaims any obligation or undertaking to
publicly release any updates or revisions to any forward-looking
statement contained in this announcement or incorporated by reference
to reflect any change in AIB's expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statement is based.
This announcement contains various references to the Company's
estimate of its NAMA Assets as being ¤24.2 billion on a gross loan
basis (i.e. before taking account of ¤2.3 billion of loan loss
provisions as at 30 June 2009). That estimate by AIB of the likely
value of its NAMA Assets is based on:
* the Assumptions (as defined below);
* the work undertaken by the Company in response
to a request made by the interim NAMA management to provide NAMA
with details in respect of certain of the Group's bank assets; and
* certain parts of the speech delivered by the
Minister for Finance for Finance to the Dáil (the lower house of
the Irish parliament) on 16 September 2009 (included in Appendix IV
of Part I of the Circular).
Shareholders should note that the extent of AIB's NAMA Assets that
may be acquired by NAMA will be determined by the NAMA Act and the
Eligible Bank Assets Regulations and it may be different from the
estimated figure referred to above. Accordingly, it should be noted
that the resolution regarding participation in the NAMA Programme (if
passed) will authorise the Company to proceed with participation in
the NAMA Programme on the terms contained in the NAMA Act.
The "Assumptions" are:
(i) NAMA Assets with a value of approximately ¤24.2
billion on a gross loan basis (i.e. before taking account of ¤2.3
billion of loan loss provisions as at 30 June 2009) will be
transferred from AIB to NAMA;
(ii) AIB will receive in consideration for the
transfer of its NAMA Assets (excluding accrued interest and
derivative instruments referred to in (vii) below) NAMA bonds and
subordinated NAMA bonds with an aggregate value of approximately
¤17.0 billion, equating to the average industry-wide discount of 30
per cent. for NAMA Assets announced by the Minister for Finance on 16
September 2009;
(iii) the ¤24.2 billion referred to in (i) above
comprises ¤17.1 billion in respect of land and development loans to
customers of AIB and ¤7.1 billion in respect of those facilities that
were classified in AIB's loan book at 30 June 2009 as associated with
such loans to those customers;
(iv) only land and development loans (and associated
loans) recorded in AIB's books in Ireland, the United Kingdom, the
United States and Canada will transfer to NAMA;
(v) borrowers with land and development loans with an
aggregate value of less than ¤5.0 million per borrower will be
excluded;
(vi) five per cent. of the purchase price of the NAMA
Assets will be in the form of subordinated NAMA bonds; and
(vii) in addition to the gross loan balances referred to
in (iii) above, accrued interest and derivative instruments relating
to the NAMA Assets will form part of the transfer to NAMA. It is
assumed that AIB will receive consideration from NAMA for the accrued
interest and derivative instruments net of the average industry-wide
discount of 30 per cent. as referred to in (ii) above
-ENDS-
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
