AIB to pay govt up to 2 bln euros via preference shares -Bloomberg

DUBLIN, Oct (HKSE: 3366-OL.HK - news) 29 (Reuters) - Allied Irish Banks (EUREX: 558453.EX - news) is seeking to redeem 1.5 to 2 billion euros of government-owned preference shares by the end of the year, Bloomberg reported on Thursday, citing people with knowledge of the matter.

State-owned AIB is in talks with European regulators on reorganising its capital structure, including how much the bank can repay the government from the 3.5 billion euros of preference shares it owns in the bank.

The plan to redeem up to 2 billion euros is subject to market conditions and final approval from the European Central Bank's supervisory unit is expected by the middle of November, Bloomberg quoted one of the sources as saying.

AIB has said the remainder would convert to equity with the bank maintaining its capital levels by replacing the shares with Tier 2 and Additional Tier 1 bonds, types of debt.

Ireland (Other OTC: IRLD - news) 's finance minister said last month that the government would recover 3-4 billion euros in the next 12 months through redemption of the preference shares, plans to redeem 1.6 billion euros worth of state-owned contingent capital notes (CoCos) next July, and through dividends on its shares.

The rescue of AIB has cost taxpayers 21 billion euros, the most given to any Irish bank still trading, and the government said it plans to recover it all over a period of years, including funds raised in an initial public offering (IPO) set for next year.

The finance ministry and AIB declined to comment.

(Reporting by Padraic Halpin, editing by David Evans)