Bank of Ireland says it has reduced the number of individual shareholder accounts on its register by 24,264, after completing a so-called ‘odd lots’ buyback offer.
The tally means the vast bulk of around 26,000 individual investors who had held 30 shares or fewer before the buyback accepted the bank’s one-off offer to pay a 5pc premium over the share price to cash out their stakes.
The offer closed last Friday, and including the 5pc premium, shareholders who subscribed were paid €20.93 a share. That means a payout of €627.90 for a shareholder with the maximum eligible 30 shares.
All told, Bank of Ireland, whose CEO is Myles O’Grady, bought back 270,100 of its own shares, which will now be cancelled.
When the odd-lots offer was announced in April, the bank had approximately 75,500 registered shareholders, but the register was skewed by the 35pc of shareholders who between them owned just 0.03pc of the bank.
The odd-lots offer was a voluntary process aimed at coaxing small shareholders who might otherwise be put off by the cost or hassle involved in selling small stakes.
Dealing costs normally render such a disposal uneconomic, the bank said. The odd-lot mechanism means shareholders were able to sell without incurring any broker fees.
AIB has also completed a number of odd-lot offers to clean up what had been a sprawling share register. Its offer to buy shares from any investors will 50 shares of fewer this summer won over only around 70pc of small investors who opted to take the opportunity to exit. An earlier 2014 odd-lots offer for people with 20 shares or fewer won over close to 90pc of eligible shares.
Both AIB and Bank of Ireland ended up with very large numbers of shareholders holding very small stakes in the banks as a result of the banking crisis, bailouts and subsequent recapitalisations of the lenders almost two decades ago. When the banks were recapitalised by the State or by new investors, any incumbent shareholders were heavily diluted and in effect saw the value of their investments shrink dramatically.
The high cost of stockbroking fees relative to the post-crash valuations meant it wasn’t viable even to sell at the new notional levels. Meanwhile, as heavily regulated stock-market listed companies, the banks still have onerous obligations to maintain communications and enable voting by all shareholders, no matter how small their stake.