Allied Irish Banks Limited was formed in 1966 as a new company that acquired three Irish banks:
Provincial Bank of Ireland, the
Royal Bank of Ireland, and the
Munster & Leinster Bank. In 1966, AIB's aggregate assets were
IR£255 million (€323.8 million)—as at 31 December 2005, the AIB Group had assets of €133 billion. In the 1980s the introduction of their Automatic Teller Machine Network called Banklink just shortly after the Bank of Ireland Pass. ATMs were only available in cities and major towns in the 1980s but arrived into smaller and medium towns during the 1990s.
Early history In 1825, Provincial Bank commenced operations, pioneering joint stock branch banking in Ireland. It also established a branch in London. The Royal Bank of Ireland (RBI) began operations in 1836 with a capitalisation of £1,500,000, it was floated to take over the business of Shaw's private bank (founded 1797), becoming known for its mercantile links. In 1864, the Munster Bank was established. In 1867, the Munster Bank purchased some of the branches of the unsuccessful Union Bank of Ireland. In 1870, the Munster Bank acquired the David La Touche & Son bank (established 1693). In 1885, the Munster Bank failed due to debt and ran out of cash, causing it to close all of its branches. In 1923, the Royal Bank of Ireland bought the
Irish Free State business of the
Belfast Banking Company, which in turn bought the
Northern Ireland business of the Royal Bank.
1985 ICI collapse The Can of Worms at ICI was the headline in
Business & Finance magazine on 8 November 1984. The
Insurance Corporation of Ireland (ICI) was a wholly owned subsidiary of AIB when it collapsed in 1985 with losses of over
IR£200 million. When it was discovered in November 1984 that ICI was operating below the statutory reserve ratio, a request for further capital was made to AIB — ICI had returned a profit of more than £80 million the previous year. This collapse occurred at a time of deep economic recession in Ireland. The level of Government debt at that time was 116% of GDP. But the Irish taxpayer bailed ICI out of its difficulties. The
Irish Government did so to ensure a continuation of the insurance business and to protect policyholders. AIB claimed that it could not resolve the problems of ICI without putting its core banking business in jeopardy. The investment of £85 million by AIB in ICI was written off and the cost to the Irish taxpayer was £400 million. On 9 September 2010 AIB reached agreement to sell a 66% stake in
BZ-WBK to
Santander for €3.1 billion, the balance of the shares to be sold on the open market. Any purchase over 66% would have forced Santander to make an offer to buy the entire company.
Recent history Between 1999 and 2001 AIB had an interest in
Keppel TatLee Bank in
Singapore, but withdrew after
Oversea-Chinese Banking Corporation (OCBC) acquired it. After suffering large losses due to the activities of
rogue trader John Rusnak at Allfirst (see below) in April 2003, AIB completed a deal merging Allfirst with M&T Bank Corporation, which is headquartered in
Buffalo, New York. In November 2010, AIB sold its 22.5% stake (26.7 million shares) in M&T. The shares were sold at
US$77.50 per share and generated $2.1 billion. The sale was part of AIB's effort to raise capital amidst the ongoing financial crisis in Ireland. AIB maintains its current US customer treasury services from its branch in New York. At the beginning of 2008 AIB entered the
Latvian,
Estonian and
Lithuanian markets by acquiring the
AmCredit mortgage finance business from the
Baltic American Enterprise Fund. Now AIB operates as a branch of this financial group in Estonia and Lithuania (update needed), operations in Latvia have ceased (see below). In 2008 AIB operated through its local branches providing financial services under established AmCredit brand in all three countries. AmCredit operated as a single product mortgage business, but the company is expanding the range of banking products. All AmCredit's mortgage customers automatically became customers of the AIB branch in their country. The goal of AIB is to become a full service customer focused bank in the Baltic region. The branch in Latvia was operating between 26 November 2007 (date of registration) and 20 September 2012 (date of liquidation). Its mortgage portfolio of 800 loans was acquired by Swedbank. In February 2008, AIB entered into an agreement to acquire a 49.99% interest in Bulgarian American Credit Bank (BACB), a specialist provider of secured finance to small and medium-sized companies in
Bulgaria. AIB later sold its stake in BACB to a Bulgarian private-equity fund for a nominal sum in May 2011. The Irish government received shares of €3.5 billion in AIB in 2009 as part of measures to recapitalise the bank. In April 2010, AIB announced that the Irish government would receive a stake of 16% or 17% in the bank. The Irish State had been due to receive dividends on those shares, but EU regulations state that banks that get State aid cannot make cash payments. This forced AIB to give the government shares instead. The bank is currently involved in a number of "sale and leaseback" deals with its properties. In 2005 it sold an extension to its
Ballsbridge Bankcentre headquarters for €367 million. In February 2006 the bank announced record pre-tax profits of €1.7 billion, a 23% rise on the previous year and the largest ever for an Irish bank. The majority of the increase came from its Republic of Ireland operations, but with its Capital Markets in Northern Ireland, Great Britain, Poland and American divisions also making significant contributions. This led to criticism from some newspapers, as their profit per customer was some three times that of other European banks. Former
Labour Party leader
Pat Rabbitte called for more competition in the Irish banking sector. In August 2006 the bank again announced record profits for the first half of 2006, making €1.2 billion before tax, equating to €1.2 million per hour.
2008 share price collapse The international credit crunch presented the first challenge to AIB — namely a dramatic fall-off in liquidity. As AIB depended to a significant extent on the international financial markets for liquidity due to an insufficient deposit base, this impacted the bank severely. The Irish government stepped in with a guarantee which effectively granted a triple A rating on AIB debt, thus freeing up its
access to finance. The second and more serious problem, unacknowledged by bank management, the financial regulator and the Irish government, is
solvency. The question concerning solvency has arisen due to domestic problems in the
crashing Irish property market. AIB, like most Irish financial institutions, has substantial exposure to property developers in their loan portfolio. These property developers are currently suffering from gross over-supply of property, much still unsold, while demand has evaporated. The massive immigration from Eastern Europe which had propped up demand has now reversed due to rapidly rising unemployment in Ireland. Irish property developers own
speculated billions of euros of overvalued land parcels such as urban brownfield and greenfield sites, and also agricultural land at an average value of €23,600 per
acre (US$32,000 per acre or €60,000 per
hectare) which is several multiples above the value of equivalent land in other European countries. AIB correctly identify a systematic risk of triggering an even more severe financial crisis in Ireland if they were to call in the loans as they fall due. The loans are subject to terms and conditions, referred to as "covenants". Although AIB is not one of the banks listed as waiving these covenants, confidence in the Irish banking system is low as a result of other Irish banks electing to waive these financial safeguards in fear of provoking the (inevitable) bankruptcy of many property developers and banks are thought to be "''lending some developers further cash to pay their interest bills, which means that they are not classified as 'bad debts' by the banks''." Furthermore, AIB's balance sheet indicated only limited impairment (bad debt) provisions. Their 2008 1st half financial report only accounts for an impairment provision of 0.21%. This does not appear to be consistent with the real negative changes taking place in property market fundamentals. The Central Bank told the
Oireachtas Enterprise Committee that shareholders who lost their money in the banking collapse are to blame for their fate and got what was coming to them for not keeping bank chiefs in check, but did admit that the Central Bank had failed to give sufficient warning about reckless lending to property developers. In contrast, on 7 October 2008,
Danske Bank wrote off a substantial sum largely due to property-related losses incurred by its Irish subsidiary,
National Irish Bank. Write downs by the domestically owned Irish banks are only now beginning to take place. When asked if they had ever issued a sell notice on AIB, a Goodbody spokesman said "I don't know if we even keep records going back that far".
Rescue package 2009 On 12 February 2009 the Irish government arranged a €7 billion rescue plan for AIB and
Bank of Ireland. The bank's capital value had fallen to €486 million, rather less than its 70% holding in
Bank Zachodni in Poland.
Goodbody Stockbrokers was sold as part of the restructuring plan for €24 million. The
Financial Times commented that the lowly price tag placed on Ireland's oldest stockbroker and "one-time bastion of Ireland's
Protestant business elite" was just another measure of the dramatic decline of the Irish economy. AIB were likely to have had to indemnify the new owners of Goodbody Stockbrokers against any legal action arising from the firm's boom-time trading.
2010: Nationalisation On 30 September 2010, the Irish Government announced plans to use its
National Pensions Reserve to inject €3.7 billion of capital into Allied Irish Banks, becoming the majority shareholder and effectively
nationalizing the bank. AIB needed to raise additional capital due to increasing losses on bad loans incurred from the
real estate bubble, and Irish Finance Minister
Brian Lenihan stated that the bank was unable to attract sufficient interest from private investors. As part of the deal, Chairman Dan O'Connor agreed to quit the bank while managing director, Colm Doherty, announced he would leave before the end of the year after 13 months in the job. In December 2010, the
European Commission approved the plans, and the Government passed emergency legislation to allow the deal to take place without requiring the approval of existing shareholders. The High Court subsequently approved the deal on 24 December 2010, allowing the Irish government to take a 49.9% stake in the bank, rising to 92.8% following disposal of the Polish subsidiary to
Banco Santander. AIB became the fourth of Ireland's "Big Six" financial institutions to be nationalised, following
Anglo Irish Bank,
Irish Nationwide Building Society, and
EBS Building Society. AIB was delisted from the main market of the
Irish Stock Exchange on 25 January 2011
2011 AIB filed lawsuit AIB filed a lawsuit against Oracle Financial Services, India in January 2011, claiming breach of contract on Flexcube implementation. The case was settled later that year.
2020 Workforce reduction In December 2020 AIB announced its intention to cut 1,500 jobs by 2023 noting that due to the
COVID-19 pandemic, 80% of its workforce had been working from home. Some branches were also merged.
Re-privatisation The former
Minister for Finance Pascal Donohoe said that the
government would be selling its then 71% stake in the bank, with the sell-off beginning in January 2022. In June 2024, it was announced that the government's ownership had reduced to 25% as part of a share sale at the time. In March 2025, the Irish Government announced its plans to reduce its stake in AIB Group from 12% to around 3% after approving the bank's €1.2 billion share buyback plan. The move continued Ireland's gradual exit from the bank, which it nationalised in 2010 with a €21 billion bailout. In June 2025, the Irish Government sold its remaining stake in AIB, thus returning the bank to full private ownership. ==Controversy==