Bernard Byrne: AIB has learnt from "painful history" as bank refloats

A landmark day for the lender

With Finance Minister Michael Noonan finally pulling the trigger on the sale of 25% of the Government's stake in AIB, the bank's chief executive described its stock market return as a big "thank you" to taxpayers, as well as the bank's staff and customers.

Bernard Byrne told Newstalk's Vincent Wall this morning that it was a "landmark day" for AIB and that the Government's decision to refloat it "does confirm that the bank is now ready to move to private ownership".

Asked how he could assure potential investors that AIB will pursue a strong dividend policy, Byrne said:

"The key elements of our story are really around the strength of our capital position and the fact that we generate significant profitability on a recurring basis, which makes it attractive as a dividend play.

"We've all learnt from the painful history and are making sure that we do the right thing in terms of having the right risk appetite and the appropriate conservative lending policies. And run our business efficiently, so we can generate that return.

"That is what we're about and that will be what potential investors find attractive if they're interested in being exposed to banking."

Byrne revealed that, as he prepares to spend the coming weeks hard at work wooing investors, he had seen keen interest already and painted a positive picture of the financial institution's current standing.

"[I will be telling] a good story about a re-engineered bank and a simplified business," he said. "A profitable and capital-generating bank, and one that's in a growing economy with strong demographics.

"We've met an awful lot of investors since the beginning of the year and the appetite is good. They generally like and understand the bank at this stage.

"Many of them have been following us for the last number of years and have seen the progress. They like the Irish economy and see the positive trends in that underlying economy and the growth in employment has been very positive.

"The European backdrop is obviously very positive as well as Europe is getting into a growth phase.

"So when you take the strong bank in a strong economy and the fact that bank stocks in general have moved into favour, it's a positive situation."

While he would not be drawn on whether the Government's latest estimated €11.3 billion price tag undervalued the bank, Byrne stated that "the interest in banks is strong at this point in time and values are up", making it "an attractive time" for a sale.

He dismissed talk of the bank having to extend its services to other markets as it continues to grow, to minimise the risk of overexposure at home, arguing that there was plenty of business still to be done on Irish soil:

"Part of the restructuring of the bank was to get us down to a core, very focused business. And we've been doing that and done that successfully in the last while.

 "We think there's still plenty to go for in the Irish market. The growth in the economy is obviously very helpful from that point of view and there are a number of areas where our market shares are a lot lower than our average.

"The whole area of wealth pensions that really hasn't been well served for the last number of years given the economic situation. So I think there's plenty of growth opportunities in the Irish economy for the next number of years."

The State's remaining almost 75% stake in AIB will eventually be sold off as well, with Michael Noonan predicting that it could take up to a decade to return it to full privatisation.

Asked whether he would remain onboard to see that through, Byrne concluded:

"I joined the bank in 2010 with the objective of hopefully being part of the team that would see this day.

"We've another set of milestones now as we begin the next phase of the process, which is returning the bank fully to private ownership and to continue to deliver on the business model.

So I think there's plenty for us to do and plenty of excitement left in terms of what we're trying to deliver."