Allied Irish Banks, p.l.c.
Extraordinary General Meeting
Executive Chairman Mr. Dan O’Connor’s SPEECH
(“AIB”) (NYSE: AIB) EGM speech delivered by the Executive Chairman to
Extraordinary General Meeting in AIB Group, Bankcentre, Ballsbridge, Dublin 4,
Ireland
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Holding Slide: AIB EGM
Good morning ladies and gentlemen, and welcome to the meeting.
My name is Dan O’Connor, I’m the Chairman of AIB.
We have a quorum, so I now formally open the EGM.
The Notice of the Meeting was posted to Shareholders on 30 November, 2009, and
so I will dispense with the formal reading of the Notice.
I do appreciate that, being so close to the Christmas holidays, it is not the
most convenient of dates.
I regret the inconvenience, but in the circumstances, we believed it was
necessary to convene the meeting before Christmas.
I want to acknowledge and welcome the shareholders who are following today’s
proceedings in Cork, Galway and Belfast.
I’m joined on the platform on my far right by MaeliosaÓhÓgartaigh, our Acting
Group Chief Financial Officer, and to my immediate right, Colm Doherty, our
Group Managing Director. To my left is David O’Callaghan, our Company
Secretary, and on my far left is Bryan Sheridan, our Group Law Agent.
We have significant business to conduct today and I know that many shareholders
will wish to speak.
My intention is to allow as many people as possible to speak and to try and
respond to your questions and comments as clearly as possible.
Slide 1: Two Resolutions for consideration
We have two resolutions to consider.
The first resolution seeks approval for AIB to participate in the NAMA
Programme.
The second resolution arises from the Shareholders’ Rights Directive which was
implemented in August this year and will, if approved, enable the Company to
convene certain meetings of Shareholders on 14 days’ notice.
I will elaborate on both resolutions in due course.
But firstly I want to start by stating very clearly that both my colleagues on
the AIB Board and I fully accept that many of AIB’s problems have been self
inflicted.
I want to put on record our acknowledgement of, and gratitude for, the support
of the Irish Government and taxpayers and the key role they have played in
helping us deal with these unprecedented events.
I also want to express our deep regret to all our shareholders for the part AIB
has played in the events which have led us here today.
If we could change the past we would but, unfortunately, that’s not possible.
And I can assure you that myself, our new Managing Director, Colm Doherty, and
the rest of my colleagues on the Board, together with everyone throughout AIB
are fully focussed on taking the actions needed to secure a better future for
this organisation, our shareholders and the Irish economy.
To rebuild, we need to take a series of actions including participating in NAMA,
agreeing a restructuring plan with the European Commission and implementing that
plan. The outcome and consequences of these actions are uncertain and not
within the sole control of AIB.
Under Colm’s leadership, a new management team is being put in place in a drive
to restore our business to a sound and sustainable basis and one in which risk
is identified and managed in a timely and effective way.
The successful delivery of NAMA is the first step, and a key one, in this
process.
Slide 2: NAMA Programme Overview
In April 2009, the Minister for Finance announced the Government’s intention to
establish the National Asset Management Agency with the aim of restoring
stability to the banking system and facilitating the restructuring of credit
institutions of systemic importance to the Irish economy.
The Government has acknowledged AIB’s systemic importance in the context of the
2008 Bank Guarantee Scheme, and by virtue of the €3.5 billion investment in the
Company in 2009 by the National Pensions Reserve Fund Commission.
The Company has been engaged in continuing discussions with the interim NAMA
Management in order to understand the potential impact of the NAMA Programme on
AIB.
Slide 3: AIB – NAMA Assets (as at June 09)
On the basis of statements made by the Minister and statements included in the
NAMA Draft Business Plan, we estimate that NAMA will acquire from AIB land and
development loans and certain Associated Loans with an aggregate value of
approximately €24.2 billion.
However, the actual value of the loans that NAMA acquires from AIB may be
different.
Consideration for the NAMA Assets acquired from AIB will be in the form of NAMA
Bonds, which we expect, based on the Minister’s public guidance, will be
approximately €17.0 billion.
We understand that the acquisition by NAMA of AIB’s NAMA Assets will commence in
January 2010 and is targeted to be completed by July 2010.
The Board has noted the public guidance provided by the Minister in relation to
the value at which NAMA Assets will be acquired, indicating an average industry
discount of 30% to the gross value.
However, as we pointed out in the Circular, there can be no assurance that this
will be the case.
The discount applicable to the Company’s Assets acquired by NAMA will not be
known until such time as each loan has been individually valued by NAMA and that
valuation has been served on the Company by NAMA.
Slide 4: Benefits of NAMA participation
The Board believes that NAMA Participation will provide a number of benefits to
the Group that should support its business and help to improve its long-term
outlook.
First, the Board believes that NAMA participation will reduce uncertainty
relating to AIB, its business and its financial performance because it will:
* improve AIB’s liquidity and funding position;
* reduce the Group’s leverage by reducing the level of loans held on its
balance sheet; and
* enable AIB to sell certain land and development loans and Associated Loans
to NAMA and thereby determine the Group’s losses associated with those
loans.
Secondly, the Board believes that NAMA participation will help restore
confidence in AIB.
Slide 5: Alternatives to NAMA Participation
We have considered the viability of alternatives to participation in NAMA.
In the absence of NAMA, the Company would need to put in place additional term
funding and raise further capital.
Such capital and funding arrangements would need to be put in place prior to
mid-January 2010, when the application to participate in NAMA should be made,
assuming shareholder approval.
I have to tell you that there are no viable alternatives for raising that
capital and having committed funding in place in the necessary timeframe.
Slide 6: Capital
Uncertainty remains about the levels of capital which banks will be required to
hold in the future.
However, as previously indicated, it is our intention to raise additional
capital within the next year.
We are currently exploring a number of ways to bolster our equity capital base
through asset sales, the introduction of a strategic investor, and a public
share issue which may require Government support.
Slide 7: Shareholders’ Rights Directive
The Second Resolution relates to changes arising from implementation of the EU
Shareholders’ Rights Directive in August 2009.
Prior to the implementation of that Directive, a public company was permitted to
convene any meeting of Shareholders, with the exception of an annual general
meeting or a meeting to consider a special resolution, on 14 days’ notice. This
has now moved to 21 days notice.
The Directive allows a Company to continue to utilise, where appropriate, the
shorter notice period of 14 days once a resolution, such as the Second
Resolution, is approved by shareholders.
And in such a highly uncertain and volatile environment, the Directors consider
that it is in the interests of the Company and the shareholders to retain that
flexibility.
The Second Resolution seeks such approval.
If passed, the approval will be effective until the Company’s next annual
general meeting, when it is intended that a similar resolution will be proposed.
Slide 8: Recommendation
The Board considers that the NAMA Participation and the Resolutions are in the
best interest of Shareholders.
Accordingly, the Board recommends that Shareholders vote in favour of the
Resolutions
Slide 9: AIB holding slide
Finally, I would like to add that today is an extremely important day.
The decisions made will affect all of our futures.
Rebuilding both our business and the Irish economy will take time. It will have
to be done step by step.
I believe NAMA is one of the key steps in the process and I hope our
participation will have your support.
Thank you.
-Ends-
For further information please contact:
Alan Kelly Catherine Burke
General Manager, Group Finance Head of Corporate Relations
AIB Group AIB Group
Dublin 4 Dublin 4
Tel: +353-1-6412162 Tel: +353-1-6413894
[HUG#1367156]
EGM Slide Presentation - 23 Dec 2009:
http://hugin.info/133324/R/1367156/334237.pdf