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AIB postpones establishment of holding company as IPO nears

Allied Irish Banks Plc has postponed plans to set up a holding company in compliance with the European Central Bank's regulations on bank resolution, The Irish Times reported, citing sources.

The establishment of a holding company, which is intended to minimize taxpayer losses in future government bailouts of banks, will not take place until later in 2017, the sources said, according to the June 5 report.

In early February, the ECB's Single Resolution Board asked the lender to establish a holding company to enable its resolution via a so-called single point of entry bail-in strategy, which entails having one company through which regulators can enact a resolution of a failing bank and impose losses on shareholders and other stakeholders.

The Irish lender has been simultaneously working on the restructuring task and its long-awaited planned IPO, which has recently been given the go signal by Finance Minister Michael Noonan. Based on unpublished reports by analysts with investment banks working on the stake sale, AIB could potentially be valued at €11 billion to €14 billion. A €12.5 billion average of the range indicates that the IPO is likely to be priced at €4.60 per share, with the government getting €3.1 billion of proceeds from the sale, the report noted.

The official terms of the listing, including the price range at which the shares will be sold, are expected to be published mid-June, following the U.K. general election. Ireland, which owns 99.8% of AIB, is planning to initially sell roughly 25% of the lender in the IPO.