October 13, 2019 / 10:01 AM / a month ago

AIB seeking approval for distribution of excess capital, CEO says

DUBLIN, Oct 13 (Reuters) - Allied Irish Banks is seeking regulatory approval to begin returning excess capital to shareholders next year, Chief Executive Colin Hunt was quoted as telling the Sunday Independent.

AIB’s plans to distribute capital above the level demanded by regulators was a key selling point of its 3.4 billion euro 2017 initial public offering (IPO) when the Irish government offloaded a 29% stake in the then fully state-owned lender.

The bank’s fully loaded core Tier 1 capital ratio - a measure of financial strength - stood at 17.3% at the end of June, well above its medium-term target of 13%. It resumed paying an annual dividend in 2017.

“A central plank of the IPO thesis in 2017 was that we would have a special distribution of excess capital. That remains a priority for us,” Hunt told the newspaper in an interview.

“We have a very strong capital position. I would like to see us commencing the process of returning excess capital to our shareholders — including all our shareholders — in 2020. But that is all subject to regulatory approval.”

Hunt also said the bank planned to cut its number of staff below 9,000 from 10,000 by the end of 2022 as part of a three-year strategy to be announced early next year, noting that some 20% of staff work in credit arrears, which have improved in recent years.

AIB imposed a temporary embargo on recruitment and promotion in August following a rise in staff expenses.

“It is inevitable that we will have a smaller workforce in the medium term,” Hunt said in the interview. (Reporting by Padraic Halpin; Editing by Elaine Hardcastle)

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