- Sale of final 2% earns state 305 million euro
- State breaks even on funds put into three main lenders
- Sale an important milestone, finance minister says
DUBLIN, June 17 (Reuters) - Ireland has sold its remaining shares in AIB Group, one of the two dominant lenders it effectively nationalised 15 years ago as part of the euro zone's biggest state rescue, the finance ministry said on Tuesday.
Ireland pumped 64 billion euros ($74 billion) or almost 40% of its then annual economic output, into the country's banks after a huge property crash in the late 2000s stemming from the global financial crisis. Two banks that swallowed up more than half of the capital still failed.
Most of the remaining funds - 20.8 billion euros - went into AIB and the state's return from the bank stood at 19.8 billion euros after it sold its residual 2% stake for 305 million euros, the ministry said. AIB is also in talks to buy back state-owned stock warrants worth around 250 million euros.
Ireland's public finances have since recovered to become the healthiest in Europe thanks to a boom in corporate tax paid by foreign multinationals. The government plans to use the proceeds of the recent share sales as part of a major investment drive to improve critical infrastructure.
"This is an important milestone in delivering on the government’s policy of returning the banking sector to private ownership," Finance Minister Paschal Donohoe said in a statement.
While Dublin did not fully recoup the cost of bailing out AIB, Donohoe said last month the state was at that point 300 million euros above break-even on the 29.4 billion combined pumped into AIB, chief rival Bank of Ireland and the smaller Permanent TSB.
That was mainly thanks to the 6.7 billion euros recovered from the 4.7 billion put into Bank of Ireland. Ireland retains a 57% stake in Permanent TSB, having concentrated on first selling shares in the larger and more profitable banks.
The government removed a 500,000 euro pay cap from Bank of Ireland after completing a review of the sector's pay restrictions shortly after the bank returned to full private ownership. The cap has remained in place for AIB and Permanent TSB.
($1 = 0.8647 euros)
Writing by Padraic Halpin and Conor Humphries; editing by Barbara Lewis and Louise Heavens
Source: Reuters