Bank of Ireland is on track to return to full private ownership by next summer after the Department of Finance extended the timeline for selling down its stake from January to at least May 2022.
The longer timeline will give the National Treasury Management Agency, which manages the State’s investment in the bank, at least five more months to continue reducing the Government’s shareholding.
At the rate of the current disposal plan, which began in June, the State will be able to fully exit its position by the middle of next year, ending a decade-long involvement in the bank.
“The circa 1 percentage point monthly reduction would take the State to a provisional circa 3pc by the end of the extension period,” said Goodbody banking analyst Eamonn Hughes in a note to clients.
“Maybe at that stage, it could continue further with the plan or maybe such a stake would be sufficiently manageable in size to place in the market. Either way, the plan extension feeds into our earlier suggestions that the State is likely to have exited the bank by the summer.”
That view was echoed by Bank of Ireland chief executive Francesca McDonagh.
“The ongoing share sell down is an important process in normalising the relationship between the Irish State and Bank of Ireland,” said Ms McDonagh in a statement on Friday.
“We look forward to being the first Irish bank to return to full private ownership in 2022.”
The removal of the Government from Bank of Ireland’s shareholder register could ease competition concerns about the sector with the impending departures of Ulster Bank and KBC Bank Ireland.
The Competition and Consumer Protection Commission is conducting a deep-dive investigation into Bank of Ireland’s purchase of KBC’s consumer banking business.
Senior industry sources expect similar probes of Ulster Bank’s deals to sell its corporate, business and mortgage books to AIB and PTSB, which are both majority owned by the State.
Proceeds from the sale of the shares so far – which has whittled down the State’s Bank of Ireland stake from 13.9pc to 9.3pc – have amounted to around €249m.
The Government has now recovered almost €6.2bn in cash from its €4.7bn recapitalisation of Bank of Ireland.