SOURCE: Allied Irish Banks, p.l.c.

November 30, 2009 02:24 ET

AIB - Proposed Participation in NAMA

DUBLIN, IRELAND--(Marketwire - November 30, 2009) -


AIB - Proposed participation in the National Asset Management Agency
                  bank asset acquisition programme

Allied Irish Banks, p.l.c. ("AIB") [NYSE: AIB] ("AIB" or the
"Company") today announces its intention to participate in the
National Asset Management Agency ("NAMA") bank asset acquisition
programme in Ireland (the "NAMA Programme"). Participation in the
NAMA Programme is subject to approval by shareholders at an
Extraordinary General Meeting to be held at 11.00 a.m. on 23 December
2009.  This will be done by an ordinary resolution and a vote in
favour by shareholders would authorise the Company to proceed with
the participation in the NAMA Programme on the terms contained in the
NAMA Act.

Highlights

*                     Under the NAMA Programme, NAMA will acquire
  "eligible bank assets" (the "NAMA Assets") from AIB, which will
  include performing and non-performing loans. NAMA has not yet
  identified which of AIB's loans it intends to acquire under the
  NAMA Programme. AIB estimates that NAMA will acquire from AIB land
  and development loans and certain associated loans with an
  aggregate value of approximately EUR 24.2 billion on a gross loan
  basis (i.e. before taking account of EUR 2.3 billion of loan loss
  provisions as at 30 June 2009), based on assumptions outlined in
  the shareholder circular being posted to shareholders of the
  Company today (the "Circular") and set out at the end of this
  announcement (the "Assumptions").
*                     The NAMA Assets will be valued on a
  loan-by-loan basis, using the valuation methodology specified in
  the National Asset Management Act 2009 and in the associated
  regulations. The Minister for Finance has provided guidance that an
  average industry discount of 30 per cent. to the gross value of the
  NAMA Assets has been estimated, although there can be no assurance
  that this will be the case.  In the Board's view, there is no
  reason to believe that the average discount applicable to AIB's
  NAMA Assets will fall significantly outside of this guidance.
*                     The consideration for the NAMA Assets to be
  acquired by NAMA from AIB will comprise the issue to AIB of bonds
  and subordinated bonds equal in value to the purchase price of
  those assets. The Company intends to retain the bonds and
  subordinated bonds and use them as a source of further liquidity to
  support its business activities. It is expected that the
  acquisition by NAMA of all of the NAMA Assets from all of the
  participating institutions will be completed by July 2010 with the
  first tranche expected to transfer in January 2010.
*                     Participation in the NAMA Programme will 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. It is expected that this will increase market
  certainty because the NAMA Assets in general are perceived to carry
  a higher risk than other classes of assets on the Group's balance
  sheet.
*                     The Board believes that participation by AIB in
  the NAMA Programme will underpin market confidence in AIB by
  removing a key element of uncertainty and will generate the
  following benefits: (i) it should enable AIB to gain greater access
  to wholesale funding as counterparties become more comfortable with
  the Company's risk profile; (ii) it should improve customer
  confidence in AIB and should support the Company overall in
  building a larger more stable deposit base; and (iii) it should
  enhance the Company's ability, should it so decide, to access
  capital, pursue the Company's strategy and improve the resilience
  of the Group's balance sheet.
*                     Based on the Assumptions, AIB has estimated
  that, on a pro forma basis as at 30 June 2009, participation in the
  NAMA Programme would have reduced its core tier 1 capital ratio
  from 8.5 per cent. to 6.3 per cent., its tier 1 capital ratio from
  7.8 per cent. to 6.1 per cent. and its total capital ratio from
  10.7 per cent. to 9.5 per cent.
*                     The NAMA Act is structured to require a
  participant that wishes to apply to join the NAMA Programme to do
  so at a point when it will not have certainty on: (i) precisely
  which of its NAMA Assets will be acquired by NAMA; (ii) the number
  of its assets to be acquired by NAMA; (iii) the price at which its
  NAMA Assets will be acquired by NAMA; and (iv) the timing of the
  transfer of its NAMA Assets to NAMA.
*                     The Board believes, if the resolution to
  authorise participation in the NAMA Participation is not approved
  by Shareholders, it would not be possible to put in place the
  necessary levels of capital that would be expected by the market or
  funding commitments in an acceptable time period to support and
  reinforce confidence in AIB and, therefore, there is a very
  significant risk that AIB will have to rely, to a greater extent,
  on Government support to sustain its business. The terms of this
  support are likely to result in partial or full nationalisation of
  AIB.

Expected Timetable

Latest time and date for receipt of Forms of Proxy   11.00 a.m. on 21
for the Extraordinary General Meeting                December 2009
Extraordinary General Meeting                        11.00 a.m. on 23
                                                     December 2009
Expected date of completion of the transactions      by July 2010
constituting participation in the NAMA Programme(1)

Note:
(1)          It is expected that NAMA Assets will be transferred to
NAMA in a series of transfers. The expected completion date indicated
above refers to the transfer of the last of the NAMA Assets to NAMA,
as indicated by the NAMA draft business plan dated 13 October 2009.

Extraordinary General Meeting

An Extraordinary General Meeting is being convened by the EGM Notice
set out at the end of the Circular to consider and, if thought fit,
pass the resolutions. The Extraordinary General Meeting will take
place at 11.00 a.m. on 23 December 2009 in Bankcentre, Ballsbridge,
Dublin 4.

Two resolutions will be proposed at the Extraordinary General
Meeting. The first resolution will be proposed as an ordinary
resolution and concerns the approval required to enable AIB to
participate in the NAMA Programme. The second resolution, which will
be proposed as a special resolution, is not related to participation
in the NAMA Programme and will, if approved, enable the Company to
convene certain meetings of Shareholders on 14 days' notice.
Due to the size of the transaction relative to AIB's market
capitalisation, participation in the NAMA Programme constitutes a
"Class 1 transaction" under the Listing Rules of the Irish Stock
Exchange and the Listing Rules made by the UK FSA under Part VI of
the Financial Services and Markets Act 2000 of the United Kingdom, as
amended, (the "Listing Rules"). In addition, participation in the
NAMA Programme is treated as a "related party transaction" under the
Listing Rules. As a consequence, the Listing Rules require that
participation in the NAMA Programme may only be implemented if it is
approved by the Company's shareholders. The National Pensions Reserve
Fund Commission, which is regarded as an "associate" of the Minister
for Finance under the Listing Rules and which holds ordinary shares
in the Company, has undertaken not to vote on the resolution
regarding NAMA and to take all reasonable steps to ensure that its
associates (if any) will not vote on that resolution.

Documentation

The Circular, including the EGM Notice convening an Extraordinary
General Meeting of AIB to be held at 11.00 a.m. on 23 December 2009
at Bankcentre, Ballsbridge, Dublin 4, will be posted to shareholders
today.

A copy of the Circular will shortly be available to download from the
Company's website: www.aib.ie/investorrelations.
A copy of the Circular will also shortly be available for inspection
at the following locations:

1.         Allied Irish Banks, p.l.c.
Bankcentre
Ballsbridge
Dublin 4
Ireland
Tel.: +353 1 660 0311

2.         Company's Announcement Office
Irish Stock Exchange
28 Anglesea Street
Dublin 2
Ireland
Tel.: +353 1 617 4200

3.         Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
United Kingdom
Tel.: +44 207 066 1000

4.         McCann FitzGerald
Riverside One
Sir John Rogerson's Quay
Dublin 2
Ireland

5.         Linklaters LLP
One Silk Street
London
EC2Y 8HQ
United Kingdom

Enquiries
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: +353-1-641 2162           Tel: +353-1-641 3894



This is not a circular or an equivalent document. Please read the
whole of the Circular, in particular the risk factors set out in the
Circular. You should not rely on any key or summarised information as
set out in this announcement.

This announcement does not constitute or form part of any offer or
invitation to purchase, otherwise acquire, subscribe for, sell,
otherwise dispose of or issue, or any solicitation of any offer to
sell, otherwise dispose of, issue, purchase, otherwise acquire or
subscribe for, any security. The contents of this announcement should
not be construed as legal, business, financial, tax, investment or
other professional advice.

Morgan Stanley & Co. Limited ("Morgan Stanley") is acting as sponsor
and financial adviser and AIB Corporate Finance Limited ("AIB
Corporate Finance") is acting as financial adviser to AIB in relation
to participation in the NAMA Programme. Morgan Stanley and AIB
Corporate Finance are acting exclusively for AIB and no one else in
connection with participation in the NAMA Programme and will not
regard any other person (whether or not a recipient of the Circular)
as their respective client in relation to participation in the NAMA
Programme and will not be responsible to anyone other than AIB for
providing the protections afforded to their respective clients or for
providing advice in relation to participation in the NAMA Programme
or any other matter referred to in this announcement. In particular,
the advice of Morgan Stanley referred to on page 19 of the Circular
has been delivered to the Directors for the purposes of their
obligations under the Listing Rules. It has not been delivered for
the benefit of anyone else, including any shareholder of AIB, and it
is not to be relied on by anyone other than the Directors for any
purpose whatsoever.

Apart from the responsibilities and liabilities, if any, which may be
imposed on Morgan Stanley by the Listing Rules, neither Morgan
Stanley nor AIB Corporate Finance accepts any responsibility
whatsoever and makes no representation or warranty, express or
implied, for the contents of this announcement or the Circular,
including its accuracy, completeness or verification or for any other
statement made or purported to be made by AIB, or on AIB's behalf or
by Morgan Stanley or AIB Corporate Finance, or on Morgan Stanley's or
AIB Corporate Finance's behalf, in connection with AIB or
participation in the NAMA Programme, and nothing in this announcement
is or shall be relied upon as a promise or representation in this
respect, whether as to the past or future. Each of Morgan Stanley and
AIB Corporate Finance accordingly disclaims to the fullest extent
permitted by law and under the Listing Rules all and any
responsibility and liability, whether arising in tort, contract or
otherwise, which it might otherwise have in respect of the Circular
or this announcement and any such statement.

This announcement contains "forward-looking statements", within the
meaning of Section 27A of the US Securities Act of 1933, as amended,
and Section 21E of the US Exchange Act of 1934, as amended, regarding
the belief or current expectations of AIB, AIB's Directors and other
members of its senior management about AIB's businesses and the
transactions described in this announcement, including statements
relating to possible future write-downs or impairments. Generally,
words such as "may", "could", "will", "expect", "intend", "estimate",
"anticipate", "believe", "plan", "seek", "continue" or similar
expressions identify forward-looking statements.

These forward-looking  statements  are  not  guarantees  of   future
performance. Rather, they are based on current views and  assumptions
and involve known and unknown risks, uncertainties and other factors,
many of which  are outside the  control of AIB  and are difficult  to
predict, that may cause actual results to differ materially from  any
future  results  or  developments  expressed  or  implied  from   the
forward-looking statements. Factors that  could cause actual  results
to differ materially from  those contemplated by the  forward-looking
statements include, among other factors: developments in the  current
crisis in  global financial  markets; the  ability of  AIB to  access
sources of liquidity; the risk that AIB may have insufficient capital
resources to meet the minimum required by regulators; the possibility
of  AIB  requiring  further  goodwill  impairments;  the  risk   that
financial  models  determining   the  value   of  certain   financial
instruments may change over time or turn out to be inaccurate and the
value realised by AIB for its assets may be materially different from
the current  or estimated  value; the  financial stability  of  other
financial   institutions,   including   AIB's   counterparties;   the
management of AIB's capital; the policies of various governmental and
regulatory  authorities;  limitations   or  additional   requirements
imposed on AIB's activities as a result of participation in the  NAMA
Programme, the CIFS Scheme, the  ELG Scheme and the NPRFC  Investment
(each as  defined  in  the  Circular);  the  risk  that  governmental
liability guarantee schemes  may be  revoked or  changed; the  credit
ratings assigned to AIB by rating agencies; the risk that AIB may not
participate in the NAMA Programme or that the NAMA Programme may turn
out to be unsuccessful  in achieving its goals;  the risk that  AIB's
application  to  participate  in  the  NAMA  Programme  may  not   be
successful; if AIB participates  in the NAMA  Programme, the lack  of
control AIB will have  over the nature, number  and valuation of  the
assets to be transferred to NAMA  and the timing for the transfer  of
those assets to  NAMA; the risk  that the value  of associated  loans
that  NAMA  acquires  from  AIB  could  be  greater  than  the  value
attributed to them in the Assumptions (as defined below); the outcome
of EU state aid clearances and reviews; the undertakings made by, and
restrictions placed on, AIB once an  application has been made by  it
to participate  in the  NAMA  Programme; the  risk  that AIB  may  be
required to  indemnify  NAMA  in  respect  of  various  matters;  the
directions the Financial  Services Regulatory Authority,  as part  of
the Central Bank  and Financial  Services Authority  of Ireland  (the
"Financial Regulator") may give in relation to AIB's future  conduct;
the risk that  the Minister  for Finance  may direct  the Company  to
implement a restructuring plan and/or a business plan in relation  to
AIB's future  conduct; the  Company being  required to  provide  such
services in respect of NAMA Assets as NAMA requests; compliance  with
any guidelines issued by the  Minister for Finance regarding  lending
practices; and the risk  that AIB may not  recover the full value  of
the subordinated  NAMA bonds  and that  the Government  may impose  a
surcharge on the Company's profits.

No statement in this announcement is intended to constitute a profit
forecast or profit estimate for any period. The forward-looking
statements speak only as of the date of this announcement. Except as
required by the Financial Regulator, the Irish Stock Exchange, the
FSA, the London Stock Exchange plc or applicable law, AIB does not
have any obligation to update or revise publicly any forward-looking
statement, whether as a result of new information, further events or
otherwise. AIB expressly disclaims any obligation or undertaking to
publicly release any updates or revisions to any forward-looking
statement contained in this announcement or incorporated by reference
to reflect any change in AIB's expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statement is based.

This announcement contains various references to the Company's
estimate of its NAMA Assets as being EUR 24.2 billion on a gross loan
basis (i.e. before taking account of EUR 2.3 billion of loan loss
provisions as at 30 June 2009). That estimate by AIB of the likely
value of its NAMA Assets is based on:
*                     the Assumptions (as defined below);
*                     the work undertaken by the Company in response
  to a request made by the interim NAMA management to provide NAMA
  with details in respect of certain of the Group's bank assets; and
*                     certain parts of the speech delivered by the
  Minister for Finance for Finance to the Dáil (the lower house of
  the Irish parliament) on 16 September 2009 (included in Appendix IV
  of Part I of the Circular).

Shareholders should note that the extent of AIB's NAMA Assets that
may be acquired by NAMA will be determined by the NAMA Act and the
Eligible Bank Assets Regulations and it may be different from the
estimated figure referred to above. Accordingly, it should be noted
that the resolution regarding participation in the NAMA Programme (if
passed) will authorise the Company to proceed with participation in
the NAMA Programme on the terms contained in the NAMA Act.
The "Assumptions" are:

(i)                 NAMA Assets with  a value of approximately  EUR 24.2
billion on a  gross loan basis  (i.e. before taking  account of  EUR 2.3
billion of  loan  loss  provisions  as  at  30  June  2009)  will  be
transferred from AIB to NAMA;
(ii)                 AIB  will  receive  in  consideration  for   the
transfer  of  its  NAMA   Assets  (excluding  accrued  interest   and
derivative instruments referred  to in  (vii) below)  NAMA bonds  and
subordinated NAMA  bonds with  an  aggregate value  of  approximately
EUR 17.0 billion, equating to the  average industry-wide discount of  30
per cent. for NAMA Assets announced by the Minister for Finance on 16
September 2009;
(iii)               the  EUR 24.2  billion  referred  to  in  (i)  above
comprises EUR 17.1 billion in respect  of land and development loans  to
customers of AIB and EUR 7.1 billion in respect of those facilities that
were classified in AIB's loan book at 30 June 2009 as associated with
such loans to those customers;
(iv)               only land  and development  loans (and  associated
loans) recorded in AIB's  books in Ireland,  the United Kingdom,  the
United States and Canada will transfer to NAMA;
(v)                borrowers with land and development loans with  an
aggregate value  of  less than  EUR 5.0  million per  borrower  will  be
excluded;
(vi)               five per cent. of  the purchase price of the  NAMA
Assets will be in the form of subordinated NAMA bonds; and
(vii)             in addition to the gross loan balances referred  to
in (iii) above, accrued interest and derivative instruments  relating
to the NAMA  Assets will form  part of  the transfer to  NAMA. It  is
assumed that AIB will receive consideration from NAMA for the accrued
interest and derivative instruments net of the average  industry-wide
discount of 30 per cent. as referred to in (ii) above


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