PTSB and AIB have offered 195,000 investors a chance to cash out of their decimated boom time holdings in the banks
Both AIB and PTSB are offering to buy back very small shareholdings held by investors locked in since the financial crash 16 years ago. Illustration: Paul ScottOur weekly personal finance newsletter will give you the insight you need to save money and make smart spending decisions
The administration costs of dealing with this very wide group far exceeds the values of the smallholdings so it makes sense for the bank to look at cutting that cost – and buying back the shares and getting those smallholders off the share register is one way of doing it.The issue came up at the bank’s most recent general meeting of shareholders.
In any case, annual stockbroker account fees, transaction charges and stamp duty would more than eat up the value of those holdings. For shareholders the losses are clearly catastrophic. Each share you hold today in AIB at around €5.40 represents an original investment of around €5,770 if you bought the shares at their pre-crash peak. Similarly, at around €1.70, your single share in PTSB represents an original investment of €2,100 if you bought back when they were €21 euro pre-consolidation.
Two things are worth noting. First, this is an all-or-nothing offer. You cannot decide to sell some of the shares and hold on to others. Second, hanging around in the hope of a better offer in any second odd lot offer is a recklessly high risk game. I can only assume that this is because the banks figure no one would have a broker account just for these shares – as it would make no sense financially. Holdings held through such accounts will likely be more significant or the shareholders will hold reasonably substantial holdings in other companies and will not suffer the same conundrum on sale costs.
Given the sums involved here, there is hardly any scenario under which holders of either of these shares will face a capital gains tax bill – even if they have already used up their tax-free capital gains tax allowance this year.
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