TIDMALBK
RNS Number : 4712S
Allied Irish Banks PLC
02 October 2017
This announcement and the information contained herein is
restricted and not for release, publication or distribution,
directly or indirectly, in whole or in part, into any jurisdiction
in which release, publication or distribution would be
unlawful.
This announcement does not constitute a prospectus or a
prospectus equivalent document. This announcement does not
constitute an offer, a solicitation of an offer or an invitation to
any person to subscribe for or to purchase (whether directly or
indirectly) any securities. No shares in Allied Irish Banks, p.l.c.
or AIB Group plc have been marketed to, nor are any such shares
available for purchase by, the public in Ireland, the United
Kingdom or elsewhere in connection with the matters described
herein.
2 October 2017
ALLIED IRISH BANKS, P.L.C. ("AIB BANK")
Update on the resolution strategy for AIB Bank and its
subsidiaries ("AIB" or the "AIB Group")
Further to AIB Bank's announcement on 3 February 2017, AIB Bank
has today filed an application with the High Court of Ireland (the
"Court") to commence the process for AIB Bank shareholder and Court
approval for the introduction of a new holding company of the AIB
Group.
The new company, AIB Group plc ("AIB HoldCo"), is a recently
incorporated company registered in Ireland. It is intended that
this new corporate structure will be implemented by means of a
scheme of arrangement under Chapter 1 of Part 9 of the Companies
Act 2014 (and a related reduction of capital of AIB Bank) (the
"Scheme"). The Scheme requires approval by shareholders of AIB Bank
and by the Court.
A subsequent reduction of capital of AIB HoldCo, which is
expected to be concluded shortly after the Scheme has become
effective, will, if approved by the Court, be used to create
distributable reserves in AIB HoldCo.
Subject to Court approval for this application, a special
Court-convened meeting of shareholders in AIB Bank (other than AIB
HoldCo, which holds one share in AIB Bank) and an extraordinary
general meeting of all shareholders in AIB Bank are expected to be
convened and further information will be made available in due
course through the publication of a circular by AIB Bank and of a
prospectus by AIB HoldCo.
- Ends -
For further information, please contact:
Mark Bourke Rose O'Donovan Orla Bird
Chief Financial / Niamh Hore Head of Communications
Officer Investor Relations AIB Bankcentre
AIB Bankcentre AIB Bankcentre Dublin
Dublin Dublin Tel: +353-1-6415375
Tel: +353-1-6412195 Tel: +353-1-6414191/6411817 email:
email: email: orla.c.bird@aib.ie
mark.g.bourke@aib.ie rose.m.o'donovan@aib.ie
niamh.a.hore@aib.ie
ADDITIONAL INFORMATION
1. Introduction
On 3 February 2017, Allied Irish Banks, p.l.c. ("AIB Bank")
announced that it had been notified by the Single Resolution Board
(the "SRB") that the preferred resolution strategy ("PRS") under
the EU Bank Recovery and Resolution Directive ("BRRD") for the
group currently comprising AIB Bank and its subsidiaries ("AIB" or
the "AIB Group"), as determined by the SRB (as the AIB group level
resolution authority for the purposes of the BRRD and the EU Single
Resolution Mechanism Regulation) and the Bank of England, as the
resolution authority for AIB Group (UK) p.l.c. (together, the
"Resolution Authorities"), consists of a single point of entry via
a holding company. Implementation of the PRS would require the
introduction of a new AIB Group holding company and mean that any
future bail-in of instruments held by external creditors would be
expected to take place in the first instance at the level of that
holding company.
The new company, AIB Group plc ("AIB HoldCo"), is a recently
incorporated company registered in Ireland. It is intended that
this new corporate structure will be implemented by means of a
scheme of arrangement under Chapter 1 of Part 9 of the Companies
Act 2014 (the "Companies Act") and a related reduction of capital
of AIB Bank under sections 84 to 86 of the Companies Act (the
"Scheme"). A subsequent reduction of capital of AIB HoldCo, which
is expected to be concluded shortly after the Scheme has become
effective, will be used to create distributable reserves in AIB
HoldCo.
2. Reasons for and benefits of the Scheme
In order to comply with the Resolution Authorities' requirements
under the BRRD framework and ensure that the AIB Group is in a
position to issue instruments that meet minimum requirement for own
funds and eligible liabilities ("MREL") requirements, AIB Bank is
proposing to undertake a group reorganisation which will involve
the establishment of a new group holding company (AIB HoldCo)
directly above AIB Bank. AIB HoldCo will have the usual activities
of a holding company (including the overall stewardship and
governance of the AIB Group) and will also become the primary
issuer of AIB's external capital and debt instruments which are
expected to be eligible for MREL purposes. The AIB Group has
received the necessary permissions from its financial service
regulatory supervisors to establish AIB HoldCo where such
permissions are required in advance. Any post-establishment
notifications required to be made to such supervisors will be made
by the relevant AIB Group member within the permitted periods.
Establishing AIB HoldCo as the new group holding company will
ensure that AIB implements the PRS as determined by the Resolution
Authorities, has available to it a platform for the issuance of
capital and debt instruments that are expected to meet MREL
requirements under the BRRD framework and provides clarity to the
market in relation to AIB's resolution strategy and the expected
structural form of its future MREL-eligible issuances.
3. Principal features of the Scheme
A scheme of arrangement is a formal procedure under the
Companies Act that is commonly used to carry out corporate
reorganisations and is, in the view of the directors of AIB Bank
(the "AIB Bank Board"), the best way of achieving the proposed
reorganisation of the AIB Group.
Under the Companies Act, a scheme of arrangement must be
approved at a special meeting or meetings of shareholders convened
by either the directors of the company or the High Court of Ireland
(the "Court") for the specific purpose of approving the Scheme (the
"Court Meeting"). All shareholders in AIB Bank (other than AIB
HoldCo, which for technical reasons under the Companies Act
acquired and holds one share in AIB Bank) at the applicable record
time (being the "Scheme Shareholders") will be entitled to attend
and vote at the Court Meeting.
An extraordinary general meeting (the "Extraordinary General
Meeting" or "EGM") of the shareholders of AIB Bank ("AIB Bank
Shareholders") will also be convened for immediately after the
Court Meeting, in order to authorise the AIB Bank Board to take
such action as it considers necessary or appropriate to put the
Scheme into effect, including to give effect to the related
reduction of capital of AIB Bank under sections 84 to 86 of the
Companies Act (the "Scheme Resolution"). It will also consider and,
if thought fit, approve, an advisory and non-binding ordinary
resolution to acknowledge, approve and confirm the proposed
reduction of capital of AIB HoldCo. See paragraph 5 below for
further details on the proposed reduction of capital of AIB HoldCo.
All AIB Bank Shareholders at the applicable record time will be
entitled to attend the Extraordinary General Meeting.
The Scheme requires the approval of the Scheme Shareholders at
the Court Meeting and approval of the Scheme Resolution by AIB Bank
Shareholders at the Extraordinary General Meeting and the
subsequent approval of the Court.
If the Scheme becomes effective, all ordinary shares in AIB Bank
(other than the one ordinary share held by AIB HoldCo) (the "Scheme
Shares") will be cancelled, or (as the case may be) transferred to
AIB HoldCo, and the Scheme Shareholders at the applicable record
time will receive one ordinary share in AIB HoldCo (the "AIB HoldCo
Shares") for each Scheme Share cancelled, or (as the case may be)
transferred to AIB HoldCo, under the Scheme.
Applications will be made (i) to the Irish Stock Exchange plc
and to the Financial Conduct Authority for all of the AIB HoldCo
Shares to be admitted to listing on the primary listing segment of
the Official List of the Irish Stock Exchange plc and to the
premium listing segment of the Official List of the Financial
Conduct Authority; and (ii) to the Irish Stock Exchange plc and
London Stock Exchange plc for all of the AIB HoldCo Shares to be
admitted to trading on the Irish Stock Exchange plc's main
securities market and London Stock Exchange plc's main market for
listed securities ("Admission").
4. Expected timetable of key events
AIB Bank has today applied to the Court and requested that it
convene the Court Meeting. That application is expected to be heard
on Wednesday, 4 October 2017.
AIB Bank will publish and post to AIB Bank Shareholders a
circular setting out details of the Scheme and all related matters,
including notices of the Court Meeting and the EGM, shortly
following receipt of the required Court approval to convene the
Court Meeting. A prospectus relating to AIB HoldCo prepared in
accordance with Directive 2003/71/EC (as amended) and all other
applicable laws and regulations will be published, subject to the
approval of the Central Bank of Ireland. The Court Meeting (if
convened by the Court) and the Extraordinary General Meeting are
expected to be held on Friday, 3 November 2017. A further
announcement will be made by AIB Bank confirming the timing for
publication of the AIB Bank circular and the AIB HoldCo prospectus
and the date and times for the Court Meeting and the Extraordinary
General Meeting.
If the relevant approvals are obtained, the Scheme is expected
to become effective at some time in December 2017. Admission is
expected to occur shortly after the Scheme becomes effective. The
admission of the AIB Bank ordinary shares to trading on the Irish
Stock Exchange plc's and London Stock Exchange plc's main markets
for listed securities is expected to be cancelled immediately prior
to Admission.
5. AIB HoldCo Reduction of Capital
Since AIB HoldCo is a recently incorporated company, it will not
initially have distributable reserves. Therefore, the directors of
AIB HoldCo will seek the approval of the Court for a proposed
reduction of the capital of AIB HoldCo under sections 84 to 86 of
the Companies Act (the "AIB HoldCo Reduction of Capital"), which
(if approved) will create distributable reserves in AIB HoldCo.
This will involve the nominal value of each AIB HoldCo Share being
reduced from EUR2.47 (its nominal value at the time the Scheme
becomes effective) to EUR0.625, thereby replicating the nominal
value per share of the existing AIB Bank ordinary shares.
This is a legal and accounting adjustment and will, if approved,
create a new distributable reserve on the balance sheet of AIB
HoldCo of approximately EUR5 billion (assuming no further shares of
AIB Bank are issued after the date of this announcement and before
the Scheme becomes effective). The AIB HoldCo Reduction of Capital
will not, of itself, result in the return of any capital to AIB
HoldCo shareholders and should not have any impact on the market
value of the AIB HoldCo Shares.
The implementation of the AIB HoldCo Reduction of Capital is
conditional upon confirmation by the Court. At the Extraordinary
General Meeting, AIB Bank Shareholders will be asked to vote on the
creation of distributable reserves by AIB HoldCo (on an advisory
and non-binding basis). The implementation of the Scheme is not
conditional upon the AIB HoldCo Reduction of Capital becoming
effective.
6. Corporate governance and board of directors
AIB HoldCo has the same board of directors as AIB Bank. From the
time the Scheme becomes effective (the "Scheme Effective Time"),
AIB HoldCo will have the same standing board committees as AIB
Bank. All directors of AIB HoldCo have been appointed on the basis
that, with effect from the Scheme Effective Time, the terms of
their appointment will be substantially the same as those that are
currently in place with respect to their appointments to the AIB
Bank Board. No additional remuneration will be paid to the
directors of AIB Bank in respect of their appointment to the board
of directors of AIB HoldCo (the "AIB HoldCo Board"). With effect
from the Scheme Effective Time, certain of the senior executives
who are employed by AIB Bank will perform senior executive
functions in respect of AIB HoldCo.
7. Impact of the Scheme on regulatory capital
Under Regulation 575/2013 on prudential requirements for credit
institutions and investment firms (the "CRR"), upon the
establishment of AIB HoldCo as the new holding company of AIB, a
portion of the regulatory capital instruments issued by an AIB
subsidiary (including AIB Bank) to third party investors will not
be recognised in full for AIB consolidated regulatory capital
purposes. Upon the establishment of AIB HoldCo as the holding
company of AIB Bank (the current principal operating company and
holding company of the AIB Group), a portion of the regulatory
capital reserves represented by the existing additional tier 1 and
tier 2 capital instruments issued by AIB Bank will as a consequence
not qualify as regulatory capital at consolidated AIB level.
Had a new holding company for the AIB Group been implemented as
of 30 June 2017, it is estimated that the AIB's consolidated tier 1
capital ratio (transitional basis) would reduce by approximately
0.4 per cent. and its consolidated total capital ratio
(transitional basis) would reduce by approximately 0.9 per cent.,
both of which are within capital planning capacity for the AIB
Group. If, subject to regulatory approval at the relevant time, the
principal existing non-equity capital instruments issued by AIB
Bank were called at their first call dates, the impact of any
reductions would be expected to be substantially eliminated by the
end of December 2020. It should be noted that while the
introduction of AIB HoldCo as a new holding company of AIB Group is
expected to have a negative impact on the consolidated tier 1 and
total capital positions of AIB, it is not expected to have an
impact on the consolidated AIB CET1 capital position as, upon the
Scheme becoming effective, all of AIB's external shareholders will
be at the level of AIB HoldCo.
8. Risks and consequences if the Scheme is not implemented
If the Scheme does not proceed, AIB Bank will remain the
principal operating company and holding company of the AIB Group
and the AIB Bank ordinary shares will continue to be admitted to
trading on the main markets of the Irish Stock Exchange plc and
London Stock Exchange plc. In this scenario, AIB will be unable to
implement the Resolution Authorities' PRS for the AIB Group. This
could have significant regulatory and financial consequences,
including:
-- an inability of the AIB Group to meet MREL requirements
applicable under the BRRD framework in a manner set out by the
Resolution Authorities;
-- the adoption by the Resolution Authorities of a different
resolution strategy for the AIB Group that could have adverse
(including financial) consequences for the AIB Group;
-- the potential exercise by the AIB Group's regulatory
authorities of other regulatory powers (including the setting of
capital requirements) which may have adverse (including financial)
consequences for the AIB Group; and
-- enforcement actions against the AIB Group by the regulatory and/or resolution authorities.
- Ends -
FORWARD-LOOKING STATEMENTS
This announcement may contain certain forward-looking statements
with respect to the financial condition, results of operations and
business of the AIB Group and certain plans and objectives of the
AIB Bank Board or the AIB HoldCo Board. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking statements
often use words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "will", "may",
"should", "would", "could", their negative or other variations or
other words of similar meaning. These statements are based on
assumptions and assessments made by the AIB Bank Board or (as the
case may be) the AIB HoldCo Board in light of their respective
experiences and its perceptions of historical trends, current
conditions, expected future developments and other factors they
believe appropriate. By their nature, forward-looking statements
involve risk and uncertainty and the factors described in the
context of such forward-looking statements in this announcement
could cause actual results or developments to differ materially
from those expressed in, reflected or contemplated in, or implied
by, such forward-looking statements. As a result, investors should
not rely on such forward-looking statements in making their
investment decisions. No representation or warranty is made as to
the achievement or reasonableness of, and no reliance should be
placed on, such forward-looking statements.
Should one or more of these risks or uncertainties materialise,
or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this announcement. None
of AIB Bank, the AIB Bank Board, AIB HoldCo or the AIB HoldCo Board
assume any obligation to update or correct the information
contained in this announcement, whether as a result of new
information, future events or otherwise, except to the extent
legally required.
The statements contained in this announcement are made as at the
date of this announcement, unless some other time is specified in
relation to them, and publication of this announcement shall not
give rise to any implication that there has been no change in the
facts set out in this announcement since such date. Nothing
contained in this announcement shall be deemed to be a forecast,
projection or estimate of the future financial performance of the
AIB Group except where expressly stated.
IMPORTANT NOTICES
The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this announcement or its accuracy, fairness or completeness.
The contents of this announcement are not to be construed as
legal, financial or tax advice. Each prospective investor should
consult his own legal adviser, financial adviser or tax adviser for
legal, financial or tax advice, respectively.
NOTICE TO OVERSEAS INVESTORS
The release, publication or distribution of this announcement
and the documents referred to herein in jurisdictions other than
Ireland and the United Kingdom may be restricted by law and
therefore persons into whose possession any of this announcement
and the documents referred to herein come should inform themselves
about, and observe, any applicable restrictions or requirements.
Any failure to comply with such restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, AIB Bank and AIB HoldCo
disclaim any responsibility or liability for the violation of such
requirements by any person.
This announcement and the documents referred to herein do not
constitute an offer or form part of any offer or invitation to
purchase, subscribe for, sell or issue, or a solicitation of an
offer to purchase, subscribe for, sell or issue, any securities
pursuant to this announcement or otherwise in any jurisdiction in
which such offer or solicitation is unlawful. This announcement
does not comprise a prospectus or a prospectus equivalent
document.
NOTICE TO INVESTORS IN THE UNITED STATES
The Scheme relates to the shares of an Irish company (a "foreign
private issuer" as defined under Rule 3b-4 under the U.S.
Securities Exchange Act of 1934 (the "Exchange Act")) and is
proposed to be made by means of a scheme of arrangement and related
reduction of capital of AIB Bank provided for under, and governed
by, Irish law. Neither the proxy solicitation rules nor the tender
offer rules under the Exchange Act will apply to the Scheme.
Accordingly, the AIB HoldCo Shares to be issued pursuant to the
Scheme have not been and will not be registered under the U.S.
Securities Act of 1933 (the "Securities Act") or under the relevant
securities laws of any State or territory or other jurisdiction of
the United States, and are expected to be offered in the United
States in reliance upon the exemption from the registration
requirements of the Securities Act provided by section 3(a)(10)
thereof and exemptions provided under the laws of the States of the
United States in which eligible Scheme Shareholders may reside.
For the purpose of qualifying for the exemption from the
registration requirements of the Securities Act provided by section
3(a)(10) thereof with respect to the AIB HoldCo Shares issued
pursuant to the Scheme, AIB Bank will advise the Court that its
sanctioning of the Scheme will be relied upon by AIB HoldCo as an
approval of the Scheme, following a hearing on its fairness to
Scheme Shareholders at which hearing all Scheme Shareholders are
entitled to attend in person or through counsel to support or
oppose the sanctioning of the Scheme and with respect to which
notification has been given to all such Scheme Shareholders.
The AIB HoldCo Shares to be issued under or in connection with
the Scheme to a Scheme Shareholder who is neither an affiliate, for
the purpose of the Securities Act, of AIB Bank or AIB HoldCo on or
prior to the time the Scheme becomes effective nor an affiliate of
AIB HoldCo at the Scheme Effective Time would not be "restricted
securities" under the Securities Act. Scheme Shareholders who are
affiliates of AIB Bank or AIB HoldCo on or prior to the Scheme
Effective Time or affiliates of AIB HoldCo after the Scheme
Effective Time may, under Rule 145(d) under the Securities Act, be
subject to timing, manner of sale and volume restrictions on the
sale of AIB HoldCo Shares received in connection with the Scheme.
For the purpose of the Securities Act, an affiliate of either AIB
Bank or AIB HoldCo is any person who directly or indirectly through
one or more intermediaries controls, or is controlled by, or is
under common control with AIB Bank or AIB HoldCo. Whether a person
is an affiliate of either AIB Bank or AIB HoldCo for the purpose of
the Securities Act depends on the circumstances. Persons who
believe that they may be affiliates of either AIB Bank or, after
the Scheme Effective Time, AIB HoldCo should consult their own
legal advisers prior to any sale of the AIB HoldCo Shares received
upon the implementation of the Scheme.
The Scheme is subject to the disclosure requirements and
practices applicable in Ireland to schemes of arrangement and
capital reductions, which differ from the disclosure and other
requirements of U.S. securities laws.
AIB Bank and AIB HoldCo are both incorporated under the laws of
Ireland. Some or all of the officers and directors of AIB Bank and
AIB HoldCo may be residents of countries other than the United
States. It may not be possible to sue AIB Bank and AIB HoldCo in a
non-U.S. court for violations of U.S. securities laws. It may be
difficult to compel AIB Bank, AIB HoldCo and their respective
affiliates to subject themselves to the jurisdiction and judgment
of a U.S. court. It may not be possible to enforce in Ireland a
judgment of a U.S. court in respect of violations of U.S.
securities law.
None of the securities referred to in this announcement have
been approved or disapproved by the US Securities and Exchange
Commission, any state securities commission in the United States or
any other US regulatory authority, nor have such authorities passed
upon or determined the adequacy or accuracy of the information
contained in this announcement. Any representation to the contrary
is a criminal offence in the United States.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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