Allied Irish Banks, p.l.c. is one of the so-called Big Four commercial banks in the Republic of Ireland. AIB offers a full range of personal, business and corporate banking services. The bank also offers a range of general insurance products such as home, travel and car. It offers life assurance and pensions through AIB Life.
In December 2010 the Irish government took a majority stake in the bank, which eventually grew to 99.8%. AIB's shares are currently traded on the Irish Stock Exchange and the London Stock Exchange, but its shares were delisted from these exchanges between 2011 and 2017, following its effective nationalisation. The remainder of its publicly traded shares were listed on the Enterprise Securities Market of the Irish Stock Exchange until 23 June 2017.
AIB also owns Allied Irish Bank (GB) in Great Britain and AIB (NI) in Northern Ireland. In November 2010, it sold its 22.5% stake in M&T Bank in the United States. At the beginning of 2008 AIB entered the Latvian, Estonian and Lithuanian markets by acquiring AmCredit mortgage finance business from the Baltic – American Enterprise Fund. This stake was sold at a loss to Swedbank in 2012.
In 2009, Allied Irish Banks along with its competitor Bank of Ireland accepted a €3.5 billion bailout from the government of Ireland as a part of the Bank Recapitalisation Scheme. Over several further tranches, the total bailout of AIB (including EBS) amounted to €20.7 billion.
In June 2017, the Irish government completed an IPO of Allied Irish Banks. In December 2021, when the company was valued less than €6 billion on the public market, the government announced it would start gradually selling its stake. The CEO of AIB since March 2019 is Colin Hunt. Jim Pettigrew was appointed chair of the board in October 2021.
AIB has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and as a consequence is directly supervised by the European Central Bank.
Name Allied Irish Banks is usually referred to, both inside and outside the company, simply as AIB and often by its trade name of "Allied Irish Bank" (singular). In Northern Ireland, the bank traded as First Trust Bank until November 2019, while in Great Britain, it is called "Allied Irish Bank (GB)"—the only part of the operation where the full name, in the singular, is still in day-to-day use. Initially, the bank operated under the names of its former constituent companies, alongside a new AIB logo, a circle divided in three with an "A" at the centre. From 1970, these were replaced by "Allied Irish Banks". In 1990, AIB introduced a new logo (prompted, it was said in some quarters, by the remarkable similarity between its previous logo and that of Mercedes-Benz.) Since then, the bank has preferred to be referred to as "AIB", though "Allied Irish Banks plc" remains its legal name.
The bank is often referred to colloquially as "AIB Bank", an example of a redundant acronym. This is due to the name "AIB Bank" being adopted for the Republic of Ireland branch banking business at the time of the 1990 rebrand (with the word "Bank" being printed in the green stripe in the logo). This version of the logo is no longer used in print advertising but can still be seen on the façades of most AIB branches in the Republic. The 'Trustee Savings Banks' similarly rebranded to "TSB Bank" in 1993. The new logo features a depiction of Noah's Ark, after a carving on a Celtic cross at Killary Church near Lobinstown in County Meath, which dates from the 9th century.Megalithic Ireland: Irish High Crosses - Killary High Cross
History Allied Irish Banks Limited was formed in 1966 as a new company that acquired three Irish banks: Provincial Bank of Ireland, the Royal Bank of Ireland, and the Munster & Leinster Bank. In 1966, AIB's aggregate assets were IR£255 million (€323.8 million)—as at 31 December 2005, the AIB Group had assets of €133 billion. In the 1980s the introduction of their Automatic Teller Machine Network called Banklink just shortly after the Bank of Ireland Pass. ATMs were only available in cities and major towns in the 1980s but arrived into smaller and medium towns during the 1990s.
Early history In 1825, Provincial Bank commenced operations, pioneering joint stock branch banking in Ireland. It also established a branch in London.
The Royal Bank of Ireland (RBI) began operations in 1836 with a capitalisation of £1,500,000, it was floated to take over the business of Shaw's private bank (founded 1797), becoming known for its mercantile links.
In 1864, the Munster Bank was established. In 1867, the Munster Bank purchased some of the branches of the unsuccessful Union Bank of Ireland. In 1870, the Munster Bank acquired the David La Touche & Son bank (established 1693). In 1885, the Munster Bank failed due to debt and ran out of cash, causing it to close all of its branches. Also in 1885, the Munster and Leinster Bank commenced operations.
In 1923, the Royal Bank of Ireland bought the Irish Free State business of the Belfast Banking Company, which in turn bought the Northern Ireland business of the Royal Bank.
1985 ICI collapse The Can of Worms at ICI was the headline in Business & Finance magazine on 8 November 1984. The Insurance Corporation of Ireland (ICI) was a wholly owned subsidiary of AIB when it collapsed in 1985 with losses of over IR£200 million. When it was discovered in November 1984 that ICI was operating below the statutory reserve ratio, a request for further capital was made to AIB — ICI had returned a profit of more than £80 million the previous year. This collapse occurred at a time of deep economic recession in Ireland. The level of Government debt at that time was 116% of GDP. But the Irish taxpayer bailed ICI out of its difficulties. The Irish Government did so to ensure a continuation of the insurance business and to protect policyholders. AIB claimed that it could not resolve the problems of ICI without putting its core banking business in jeopardy. The investment of £85 million by AIB in ICI was written off and the cost to the Irish taxpayer was £400 million.
On 9 September 2010 AIB reached agreement to sell a 66% stake in BZ-WBK to Santander for €3.1 billion, the balance of the shares to be sold on the open market. Any purchase over 66% would have forced Santander to make an offer to buy the entire company.
Recent history Between 1999 and 2001 AIB had an interest in Keppel TatLee Bank in Singapore, but withdrew after Oversea-Chinese Banking Corporation (OCBC) acquired it.
After suffering large losses due to the activities of rogue trader John Rusnak at Allfirst (see below) in April 2003, AIB completed a deal merging Allfirst with M&T Bank Corporation, which is headquartered in Buffalo, New York. In November 2010, AIB sold its 22.5% stake (26.7 million shares) in M&T. The shares were sold at US$77.50 per share and generated $2.1 billion. The sale was part of AIB's effort to raise capital amidst the ongoing financial crisis in Ireland. AIB maintains its current US customer treasury services from its branch in New York.
At the beginning of 2008 AIB entered the Latvian, Estonian and Lithuanian markets by acquiring the AmCredit mortgage finance business from the Baltic American Enterprise Fund. Now AIB operates as a branch of this financial group in Estonia and Lithuania (update needed), operations in Latvia have ceased (see below). In 2008 AIB operated through its local branches providing financial services under established AmCredit brand in all three countries. AmCredit operated as a single product mortgage business, but the company is expanding the range of banking products. All AmCredit's mortgage customers automatically became customers of the AIB branch in their country. The goal of AIB is to become a full service customer focused bank in the Baltic region. The branch in Latvia was operating between 26 November 2007 (date of registration) and 20 September 2012 (date of liquidation). Its mortgage portfolio of 800 loans was acquired by Swedbank.
In February 2008, AIB entered into an agreement to acquire a 49.99% interest in Bulgarian American Credit Bank (BACB), a specialist provider of secured finance to small and medium-sized companies in Bulgaria. AIB later sold its stake in BACB to a Bulgarian private-equity fund for a nominal sum in May 2011.
The Irish government received shares of €3.5 billion in AIB in 2009 as part of measures to recapitalise the bank. In April 2010, AIB announced that the Irish government would receive a stake of 16% or 17% in the bank. The Irish State had been due to receive dividends on those shares, but EU regulations state that banks that get State aid cannot make cash payments. This forced AIB to give the government shares instead.
The bank is currently involved in a number of "sale and leaseback" deals with its properties. In 2005 it sold an extension to its Ballsbridge Bankcentre headquarters for €367 million.
In February 2006 the bank announced record pre-tax profits of €1.7 billion, a 23% rise on the previous year and the largest ever for an Irish bank. The majority of the increase came from its Republic of Ireland operations, but with its Capital Markets in Northern Ireland, Great Britain, Poland and American divisions also making significant contributions. This led to criticism from some newspapers, as their profit per customer was some three times that of other European banks. Former Labour Party leader Pat Rabbitte called for more competition in the Irish banking sector. In August 2006 the bank again announced record profits for the first half of 2006, making €1.2 billion before tax, equating to €1.2 million per hour.
2008 share price collapse
The international credit crunch presented the first challenge to AIB — namely a dramatic fall-off in liquidity. As AIB depended to a significant extent on the international financial markets for liquidity due to an insufficient deposit base, this impacted the bank severely. The Irish government stepped in with a guarantee which effectively granted a triple A rating on AIB debt, thus freeing up its access to finance.
The second and more serious problem, unacknowledged by bank management, the financial regulator and the Irish government, is solvency. The question concerning solvency has arisen due to domestic problems in the crashing Irish property market. AIB, like most Irish financial institutions, has substantial exposure to property developers in their loan portfolio. These property developers are currently suffering from gross over-supply of property, much still unsold, while demand has evaporated. The massive immigration from Eastern Europe which had propped up demand has now reversed due to rapidly rising unemployment in Ireland. Irish property developers own speculated billions of euros of overvalued land parcels such as urban brownfield and greenfield sites, and also agricultural land at an average value of €23,600 per acre (US$32,000 per acre or €60,000 per hectare) which is several multiples above the value of equivalent land in other European countries.
AIB correctly identify a systematic risk of triggering an even more severe financial crisis in Ireland if they were to call in the loans as they fall due. The loans are subject to terms and conditions, referred to as "covenants". Although AIB is not one of the banks listed as waiving these covenants, confidence in the Irish banking system is low as a result of other Irish banks electing to waive these financial safeguards in fear of provoking the (inevitable) bankruptcy of many property developers and banks are thought to be "lending some developers further cash to pay their interest bills, which means that they are not classified as 'bad debts' by the banks."