Statement by Minister Donohoe following AIB’s announcement that it has reached agreement to acquire Goodbody

Transaction will be good for, and will strengthen, AIB, Goodbody, Fexco and the Irish economy

Speaking this afternoon (Tuesday) following the announcement by AIB Group plc (AIB) that it had reached agreement to acquire leading financial services provider Goodbody Stockbrokers UC (Goodbody), the Minister for Finance, Paschal Donohoe TD, said today’s announcement by AIB is a positive outcome for the Irish economy as well as the three Irish businesses involved: AIB, Goodbody and Fexco*.

The Minister went onto say that the economic benefits for the country will stem from the importance of having a competitive and vibrant stockbroking sector in Ireland to help ensure that indigenous Irish SMEs and corporates can access the capital markets. This will enable them to fund their future growth plans which will underpin Ireland’s economic recovery as we emerge from the Covid-19 pandemic.

Speaking following the announcement, Minister Donohoe said:

‘Today’s announcement by AIB will have a positive impact for the State as a whole but primarily it will ensure that Goodbody continues to have a well capitalised owner providing opportunities for growth, which will support the wider needs of the Irish economy and businesses’.

“This acquisition also represents an excellent strategic opportunity for AIB to deliver on its ambition to diversify its revenue in a low interest rate environment. The addition of Goodbody offers growth opportunities for the AIB Group in broadening its financial offerings in the life, pension, wealth and asset management sectors, in addition to enabling its Irish corporate and business customers to access a greater range of services.

“For FEXCO, which is an important employer in the south-west, the proceeds it receives from the transaction will help it continue to grow and innovate in the financial services sector.

“Under the terms of the acquisition, a small number of AIB staff, including from its Corporate Finance and Wealth Management business will transfer to Goodbody in order to maximise synergies between the teams and avoid duplication of activities. There will also be a restriction on Goodbody hiring any person in the open market or otherwise, with a total remuneration package above €50,000, who was an employee of AIB (or any Group Company) at any time within the previous two years. ”

“The standard remuneration arrangements in a stockbroking business are very different to those that pertain in a retail and commercial bank such as AIB, and reflecting this the bank has sought my consent for the continuation of the current remuneration arrangements in Goodbody. This has been done in a manner which ring-fences Goodbody from the rest of the AIB Group and ensures ongoing compliance with Government policy on bank remuneration which remains unchanged.

“I also welcome today’s announcement by AIB that it intends to establish a SME Equity Fund, which will be of assistance to companies wishing to access equity finance, which will focus on backing businesses that can help accelerate Ireland’s transition towards a low-carbon economy.”

ENDS

Notes to editor

There have been no changes to the Government’s policy in relation to bank remuneration;
AIB will continue to adhere to the Government’s pay restrictions, with separate ring-fenced remuneration structures in place for Goodbody;
Completion of the acquisition is conditional on the satisfaction of customary conditions including approval by the Central Bank of Ireland and the Competition Authority;
While the Group will optimise synergies to expand customer offerings for both existing AIB and Goodbody private and corporate clients, Goodbody will remain as a separately regulated entity with its own brand and board.

Staff transfer:

In order to fully realise the significant synergies between the AIB and Goodbody businesses, a limited number of employees may transfer from AIB to Goodbody, including from AIB’s Corporate Finance and Wealth Management teams, as follows:

No movement of staff until regulatory approval is granted;
Thereafter movement will be allowed of the following numbers –

No more than 20 people over the period after regulatory approval is granted (until the end of the year),

No more than 10 people in the following year.

No more than 5 people per year each year after that.

Consent

Under the State agreements with the bank, AIB requires the Ministers consent in relation to a limited number of matters including certain remuneration matters. As Goodbody will now be part of the AIB Group the continuation of its current remuneration arrangements which includes variable pay arrangements requires the Ministers consent.

As the acquisition exceeds €100 million the bank is also required to consult with the Minister.