A loss on an asset you invested in can only be ‘crystalised’ when you get rid of it by sale or other transfer
AIB shareholder worries his holding may be too small for share buybackThis, in a nutshell, is the issue facing tens of thousands of shareholders in all sorts of companies. The banks, which were the goto destination for most dividend-seeking investors back in the day, are certainly front of the queue of misfortune when it comes to being left with uneconomic shareholdings in companies from which they once expected great things, but they are not alone.
And it is not just poorly performing businesses. There are investors with tiny holdings in CRH who are currently trying to figure out how much out of pocket they will be if offload their stock now that the prime listing has moved to the US, leaving them dealing with a bureaucracy that they cannot understand. More of the same may happen going forward as others, including Flutter/Paddy Power, Smurfit Kappa and potentially even the likes of Kerry and Glanbia, follow a similar path.
So for people in your position, the only sensible exit for many investors with minuscule holdings in these businesses is precisely the sort of low cost share sale offer that AIB and rival PTSB are currently putting the finishing touches too. Verizon and Vodafone are just two others that, in the past, offered similar arrangements for their legacy shareholders.
It will undoubtedly pass at the AGM as having this huge number of uneconomic holdings is expensive for the bank to manage and a constant reminder of a period the bank is very keen to move on from. It says the figure of 20 or fewer was chosen as, at the current share price, those holdings “would almost be entirely absorbed by costs if sold through a broker. It represents an obvious holding that is trapped or uneconomic.”
There are a couple of caveats. First, that AGM vote is simply giving the bank the power to make an “odd lot” offer, it isn’t an offer in itself. The bank says that such an offer if it happens – probably later in 2024 – will be subject to approval from the European Central Bank. This is most unlikely to be blocked but it is a step that must be undertaken and that will delay any actual purchase of your share.
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