Allied Irish Banks (AIB), one of the lenders that broke Ireland's economy during last decade's financial crisis, is back on the London market. Unconditional dealings in its shares (under ticker ALBK) on both the London and Irish exchanges began on Tuesday 27 June, after the republic's government successfully floated 25 per cent of the bank at €4.40 (389p) a share, slap bang in the middle of its pricing range and netting €3bn in gross proceeds. At time of writing, they've pushed up to €4.73.
In taking a secondary listing in London, AIB joins Bank of Ireland (BKIR), whose shareholders were also nearly wiped out in the huge recapitalisation that required the country to seek an international bailout. It is still around 14 per cent owned by the state. Shareholders of Permanent TSB (IL0A), formerly known as Irish Life & Permanent, were also hammered when it received its own injection in 2011. It raised further funds in 2015 when it rejoined the Irish and London stock exchanges; again the government has managed to reduce its holding to three-quarters of the company.
Anglo Irish Bank, which was at the very heart of the property development finance boom, did not make it through the crisis, while Ulster Bank was effectively bailed out by the UK government via its parent Royal Bank of Scotland (RBS).
This tale of woe needs its epilogue. In a note published in March, credit analysts at ratings agency S&P presented 2016 as a turning point: excluding one exceptional item, all six banks that it rates were profitable, for the first time since before the crash. An improved Irish economy has meant three years of lower credit losses and even provision releases for the sector.
This is a strong part of AIB's pitch to institutional and retail investors. Gross impaired loans have fallen by a whopping €19.8bn since end-2013 to €9.1bn. Its net interest margin (between what it receives on lending and pays on deposits) was up 28 basis points last year to 2.25 per cent.
And yet "we believe that the gradual recovery in bank creditworthiness has principally been supported by the recovery in the Irish economy and the related rise in employment levels and property prices, as opposed to significant improvements by the banks," said S&P analysts in March. Loan books are heavily weighted to residential mortgages, especially with the retrenchment from funding construction: and mortgages are a poorly performing asset in the country.
Non-performing loans, on the regulatory definition, sit at €14.2bn, or 22 per cent of AIB's total loans. That compares with 5 per cent across its European peers. And the folks at S&P don't see much space for earnings growth in a low-rate environment, especially if loan losses tick back up.
There is also disquiet about the impact of Brexit on AIB. This country provides 11 per cent of the bank's operating profit: but more to the point, many of its corporate clients rely on a good UK-Ireland trading relationship. Sentiment has reportedly weakened on concern that no deal will be struck in time.
Is this a sector worth keeping an eye on? Perhaps, yes. Capital levels are building up - AIB paid its first dividend since 2008 in respect of last year, after lifting its common equity tier one capital ratio to 15.3 per cent. Ulster is also paying back to parent RBS. But Bank of Ireland undershot expectations by declaring no dividend until 2018: analysts at JPMorgan Cazenove highlighted weaker loan balances and higher investments, against the same uncertain economic backdrop. Permanent TSB is expecting to resume payouts from 2019.
There is also the overhang of state ownership. The Irish government is not rushing to sell all at once, but the size of the stakes in AIB and Permanent does create the potential for an RBS-type stasis, if the economic weather worsens, and the loan books with it. For many private investors, I'd imagine 'once bitten, twice shy' doesn't cover it.