AIB Group Plc — Capital/Financing Update 2017

Jun 23, 2017

This document constitutes the pricing statement (the ''Pricing Statement'') relating to the Offer described in the prospectus published by Allied Irish Banks, p.l.c. (the ''Company'') on 12 June 2017 (the ''Prospectus'') and should be read in conjunction with the Prospectus. This Pricing Statement has been prepared in accordance with Article 8 of Directive 2003/71/EC (the ''Prospectus Directive'') and Regulation 24 of Prospectus (Directive 2003/71/EC) Regulations 2005, as amended (the ''Irish Prospectus Regulations''). This Pricing Statement has been made available to the public in Ireland and the United Kingdom by the same being made available, free of charge, in electronic form on the Company's website, www.aib.ie./investorrelations and, free of charge in printed form, during normal business hours on each business day up until Admission from the Company's registered office at Bankcentre, Ballsbridge, Dublin 4, Ireland, from AIB's UK office at St. Helen's, 1 Undershaft, London EC3A 8AB and at the offices of the following intermediaries: Campbell O'Connor & Company UC, Cantor Fitzgerald Ireland Limited, J&E Davy, Goodbody Stockbrokers UC, Investec Capital & Investments (Ireland) Limited, Merrion Stockbrokers Limited, Redmayne-Bentley LLP and Quilter Cheviot Limited. Capitalised terms used in this Pricing Statement and not defined herein have the same meanings given to them in the Prospectus. Investors should not purchase any Ordinary Shares on the basis of this Pricing Statement alone and, before making an investment decision, should read the information in the Prospectus, including the section entitled ''Part II: Risk Factors'' set out on pages 30 to 69 of the Prospectus.

The Company's Ordinary Shares are currently admitted to trading on the Enterprise Securities Market of the Irish Stock Exchange (the ''ESM''). Application has been made to the Irish Stock Exchange plc (the ''Irish Stock Exchange'') for all the Ordinary Shares to be admitted to listing on the primary listing segment of the Official List of the Irish Stock Exchange (the ''Irish Official List'') and to trading on its main market for listed securities. Application has been made to the Financial Conduct Authority (the ''FCA'') in the United Kingdom for all the Ordinary Shares to be admitted to listing on the premium listing segment of the Official List of the FCA (the ''UK Official List'' and, together with the Irish Official List, the ''Official Lists'') and to the London Stock Exchange plc (the ''London Stock Exchange'') for all of the Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that trading in the Ordinary Shares on the ESM will be suspended at 8:00 a.m. on 23 June 2017 and that conditional dealings on the Irish Stock Exchange and the London Stock Exchange will commence at 8:00 a.m. on 23 June 2017. Admission to the Official Lists, together with admission to trading on the main markets for listed securities of the Irish Stock Exchange and the London Stock Exchange constitutes admission to official listing on a stock exchange (''Admission''). No application is currently intended to be made for the Ordinary Shares to be admitted to listing or trading on any other exchange. It is expected that Admission will become effective and that unconditional dealings in the Ordinary Shares will commence on the Irish Stock Exchange and the London Stock Exchange at 8:00 a.m. on 27 June 2017. The earliest date for settlement of such dealings will be 27 June 2017. All dealings in Ordinary Shares following suspension of trading on the ESM and prior to the commencement of unconditional dealings on the Irish Stock Exchange and the London Stock Exchange, will be on a conditional basis, will be of no effect if Admission does not take place and will be at the sole risk of the parties concerned. Immediately before Admission, the admission of the Ordinary Shares to trading on the ESM will be cancelled.

Allied Irish Banks, p.l.c.

(incorporated in Ireland and registered in Ireland under the Companies Act 2014 with registered number 24179)

Offer of 678,595,310 Ordinary Shares of E0.625 each at an Offer Price of E4.40 per Ordinary Share

Joint Global Co-ordinator, Joint Joint Global Co-ordinator, Joint Joint Global Co-ordinator, Joint Bookrunner and Settlement Agent Bookrunner and Retail Settlement Bookrunner and Stabilising Agent Manager

Goldman Sachs J.P. Morgan UBS Investment Citigroup International Cazenove Bank

Joint Bookrunner Joint Bookrunner Joint Bookrunner Joint Bookrunner

BofA Merrill Lynch Davy Deutsche Bank AG

Investec

Co-Lead Manager

Morgan Stanley Goodbody

Joint Broker, Joint Financial Advisor Joint Broker, Joint Financial Advisor, and UK Sponsor Irish Sponsor and Joint Bookrunner

This Pricing Statement does not constitute or form part of an offer to sell or issue or an invitation to buy, or the solicitation of an offer to buy or subscribe for, any Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction and, in particular, subject to certain exceptions, is not for distribution in Australia, Canada, Japan, South Africa, Switzerland or the United States. The Ordinary Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the ''Securities Act'') or qualified for sale under the laws of any state of the United States, and no actions have been taken to allow a public offering of the Ordinary Shares under the applicable securities laws of Australia, Canada, Japan, South Africa, Switzerland or the United States. The Ordinary Shares are being offered and sold within the United States only to persons reasonably believed to be ''qualified institutional buyers'' (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and outside the United States in reliance on Regulation S under the U.S. Securities Act.

Deutsche Bank AG, London Branch, Merrill Lynch International and J&E Davy have been appointed as Joint Global Co-ordinators and Joint Bookrunners, Morgan Stanley & Co. International plc has been appointed as UK sponsor (the ''UK Sponsor''), Joint Broker and Joint Financial Advisor, Goodbody Stockbrokers UC has been appointed as Irish sponsor (the ''Irish Sponsor''), Joint Broker and Joint Financial Advisor, Citigroup Global Markets Limited, Goldman Sachs International, Goodbody Stockbrokers UC, J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) and UBS Limited have been appointed as Joint Bookrunners and Investec Bank plc (Irish Branch) has been appointed as Co-Lead Manager. The Joint Bookrunners and Co-Lead Manager are collectively referred to herein as the ''Underwriters''. Morgan Stanley & Co. International plc (in its capacity as UK Sponsor) and Goodbody Stockbrokers UC (in its capacity as Irish Sponsor) (together, the ''Sponsors'') are each acting exclusively for the Company and no one else in connection with the Offer. They will not regard any other person (whether or not a recipient of this Pricing Statement) as a client in relation to the Offer and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for giving advice in relation to the Offer or any transaction or arrangement referred to in this Pricing Statement. The Underwriters are each acting exclusively for the Selling Shareholder and the Company and no one else in connection with the Offer. They will not regard any other person (whether or not a recipient of this Pricing Statement) as a client in relation to the Offer and will not be responsible to anyone other than the Selling Shareholder and the Company for providing the protections afforded to their respective clients, nor for giving advice in relation to the Offer or any transaction or arrangement referred to in this Pricing Statement.

Deutsche Bank AG is authorised under the German Banking Law (competent authority: European Central Bank (the ''ECB'')) and, in the United Kingdom, by the Prudential Regulation Authority (the ''PRA''). It is subject to supervision by the ECB and by the German Federal Financial Supervisory Authority (Die Bundesanstalt fur Finanzdienstleistungsaufsicht ¨ ), and is subject to limited regulation in the United Kingdom by the PRA and the FCA.

J&E Davy and Goodbody Stockbrokers UC are authorised and regulated in Ireland by the Central Bank. Goodbody Stockbrokers UC is authorised and subject to limited regulation in the UK by the FCA.

Investec Bank plc (Irish Branch) is authorised by the PRA in the United Kingdom and regulated by the Central Bank for conduct of business rules. Merrill Lynch International, Citigroup Global Markets Limited, Goldman Sachs International, J.P. Morgan Securities plc and UBS Limited are authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the PRA and FCA.

None of Deutsche Bank AG, London Branch, Merrill Lynch International, J&E Davy, Citigroup Global Markets Limited, Goldman Sachs International, Goodbody Stockbrokers UC, J.P. Morgan Securities plc, Morgan Stanley & Co. International plc, UBS Limited or Investec Bank plc (Irish Branch) makes any representation or warranty, express or implied, in respect of the contents of this Pricing Statement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company and nothing in this Pricing Statement is or shall be relied upon as a promise or representation in this respect, whether as to the past or future. In addition, none of Deutsche Bank AG, London Branch, Merrill Lynch International, J&E Davy, Citigroup Global Markets Limited, Goldman Sachs International, Goodbody Stockbrokers UC, J.P. Morgan Securities plc, Morgan Stanley & Co. International plc, UBS Limited or Investec Bank plc (Irish Branch) or persons affiliated with them accept responsibility for, or authorise the contents of, this Pricing Statement or its issue, including without limitation, under section 1349 of the Companies Act or Regulation 31 of the Irish Prospectus Regulations. Each of Deutsche Bank AG, London Branch, Merrill Lynch International, J&E Davy, Citigroup Global Markets Limited, Goldman Sachs International, Goodbody Stockbrokers UC, J.P. Morgan Securities plc, Morgan Stanley & Co. International plc, UBS Limited and Investec Bank plc (Irish Branch) and persons affiliated with them accordingly disclaim all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which they might otherwise have to any person in respect of this Pricing Statement or any such statement.

The Underwriters, the Sponsors and any of their respective affiliates may have engaged in transactions with, and provided various investment banking, financial advisory and other services for, the Company and/or the Selling Shareholder for which they would have received customary fees. None of the Underwriters or the Sponsors intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

In connection with the Offer, Deutsche Bank AG, London Branch (the ''Stabilising Manager'') or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law and for stabilisation purposes, over-allot Ordinary Shares or effect other transactions with a view to supporting the market price of the Ordinary Shares at a higher level than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings in the Ordinary Shares on the Irish Stock Exchange and the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilisation, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the Ordinary Shares above the Offer Price. Except as required by law or regulation, neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Offer.

For the purposes of allowing the Stabilising Manager to cover short positions resulting from any such over-allotments and/or from sales of Ordinary Shares effected by it during the stabilising period, the Selling Shareholder has granted to it the Over-allotment Option, pursuant to which the Stabilising Manager may purchase or procure purchasers for additional Ordinary Shares up to a maximum of 15 per cent. of the total number of Offer Shares within the Offer Size (the ''Over-allotment Shares'') at the Offer Price. The Over-allotment Option is exercisable, in whole or in part, upon notice by the Stabilising Manager, at any time on or before the 30th calendar day after the commencement of conditional dealings of the Ordinary Shares on the Irish Stock Exchange and the London Stock Exchange. Any Over-allotment Shares made available pursuant to the Over-allotment Option will rank pari passu in all respects with all other Ordinary Shares, including for all dividends and other distributions declared, made or paid on the Ordinary Shares, will be purchased on the same terms and conditions as the Ordinary Shares sold in the Offer and will form a single class for all purposes with the other Ordinary Shares. Where the context so requires, references in this Pricing Statement to the ''Offer Shares'' include the Over-allotment Shares.

Recipients of this Pricing Statement are authorised solely to use it (along with the Prospectus) for the purpose of considering the acquisition of the Offer Shares and may not reproduce or distribute this Pricing Statement, in whole or in part, and may not disclose any of the contents of this Pricing Statement or use any information herein for any purpose other than considering an investment in the Offer Shares. Such recipients of this Pricing Statement agree to the foregoing by accepting delivery of this Pricing Statement.

The Offer Shares are subject to conditions and selling and transfer restrictions in certain jurisdictions. Prospective purchasers should read the conditions and restrictions contained in ''Part XX: Terms and Conditions of the Offer'' of the Prospectus. Each purchaser of the Offer Shares will be deemed to have made the relevant representations made therein.

This Pricing Statement does not constitute an offer to sell or an invitation to purchase, or the solicitation of an offer to buy, any Offer Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.

None of the Minister for Finance, the Irish Department of Finance, the Irish Government, the National Treasury Management Agency (the ''NTMA'') or any person controlled by or controlling any such person, or any entity or agency of or related to the Irish State, or any director, officer, official, employee or adviser (including, without limitation, legal and financial advisers) of any such person (each such person, a ''relevant person'' for the purposes of this paragraph) accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the accuracy, completeness or fairness of any information in, this Pricing Statement or any document referred to in this Pricing Statement or any supplement or amendment thereto (each a ''transaction document'' for the purposes of this paragraph) or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Offer Shares or the Offer and nothing in this Pricing Statement will be relied upon as a promise or representation in this respect, whether or not to the past or future. To the fullest extent permitted by law, each relevant person expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of any transaction document or any such statement. No relevant person has authorised or will authorise the contents of any transaction document, or has recommended or endorsed the merits of the offering of securities or any other course of action contemplated by any transaction document.

Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Underwriters or the Sponsors by the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3), the Investment Intermediaries Act 1995, the FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where the exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of the Underwriters nor the Sponsors accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the contents of this Pricing Statement or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Offer Shares or the Offer and nothing in this Pricing Statement will be relied upon as a promise or representation in this respect, whether or not to the past or future. Each of the Underwriters and the Sponsors, accordingly, disclaims all and any responsibility or liability, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this Pricing Statement or any such statement.

Prior to making any decision as to whether to invest in the Offer Shares, prospective investors should read this Pricing Statement and the Prospectus in their entirety, in particular, the risk factors set out in the section entitled ''Part II: Risk Factors'' of the Prospectus, when considering an investment in the Company. In making an investment decision, prospective investors must rely upon his or her own examination, analysis and enquiries of the Company and the terms of the Prospectus and this Pricing Statement, including the merits and risks involved.

The distribution of this Pricing Statement and the offer of the Offer Shares in certain jurisdictions may be restricted by law. No action has been or will be taken by the Company, the Selling Shareholder or the Underwriters to permit a public offering of the Offer Shares or to permit the possession, issue or distribution of this Pricing Statement in any jurisdiction where action for that purpose may be required other than Ireland and the United Kingdom. Accordingly, neither this Pricing Statement nor any advertisement nor any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Pricing Statement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

In particular (other than in Ireland and the United Kingdom in relation to the Offer), no actions have been taken to allow a public offering of the Offer Shares under the applicable securities laws of any jurisdiction, including Australia, Canada, Japan, South Africa, Switzerland or the United States. Subject to certain exceptions, the Offer Shares may not be offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen of any jurisdiction, including Australia, Canada, Japan, South Africa, Switzerland or the United States.

None of the US Securities and Exchange Commission, any other US federal or state securities commission or any US regulatory authority has approved or disapproved of the Offer nor have such authorities reviewed or passed upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence.

Forward-looking statements

This Pricing Statement contains certain forward-looking statements with respect to the financial condition, results of operations and business of AIB and certain of the plans and objectives of AIB. These forwardlooking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements sometimes use words such as ''aim'', ''anticipate'', ''target'', ''expect'', ''estimate'', ''intend'', ''plan'', ''goal'', ''believe'', ''may'', ''could'', ''will'', ''seek'', ''continue'', ''should'', ''assume'', or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding macroeconomic and demographic trends as well as AIB's future financial position, capital structure, credit ratings, liquidity, employees, the Selling Shareholder's shareholding in the Company, income growth, loan losses, business strategy, projected costs, capital ratios, estimates of capital expenditures, and plans and objectives for future operations. Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking information. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These are set out in the section entitled ''Part II: Risk Factors'' of the Prospectus. In addition to matters relating to AIB's business, future performance will be impacted by Irish or other relevant economies and financial market considerations. Any forwardlooking statements made by or on behalf of AIB speak only as of the date they are made. AIB cautions that the list of important factors set out in the section entitled ''Part II: Risk Factors'' of the Prospectus is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and events when making an investment decision based on any forward-looking statement.

The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Pricing Statement.

This Pricing Statement is dated 23 June 2017.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Expected timetable of principal events

Event	Time and Date(1)
Announcement of Offer Price and the Offer Size, publication of this Pricing Statement and notification of allocations of Offer Shares	7:00 a.m. on 23 June 2017
Suspension of trading in the Ordinary Shares on the ESM and latest time and date for trading in the Ordinary Shares on the ESM	8:00 a.m. on 23 June 2017
Commencement of conditional dealings on the Irish Stock Exchange and London Stock Exchange	8:00 a.m. on 23 June 2017
Cancellation of admission to trading of the Ordinary Shares on the ESM	7:59 a.m. on 27 June 2017
Admission to listing on the primary listing segment of the Official List of the Irish Stock Exchange and listing on the premium listing segment of the Official List of the FCA	8:00 a.m. on 27 June 2017
Commencement of unconditional dealings on the Irish Stock Exchange and London Stock Exchange	8:00 a.m. on 27 June 2017
CREST accounts credited in respect of Offer Shares .	27 June 2017

Note:

(1) References to times are to Dublin times. Each of the times and dates in the above timetable is subject to change without further notice.

It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. Temporary documents of title will not be issued.

FINAL OFFER STATISTICS

Offer statistics

Offer Price (per Offer Share)	A4.40
Number of Ordinary Shares in issue immediately prior to Admission	2,714,381,238
Number of Ordinary Shares in issue on Admission	2,714,381,238
Offer Size/Number of Ordinary Shares in the Offer(1)	678,595,310
Number of Ordinary Shares in the Offer as a percentage total number of Ordinary
Shares in existence on Admission(1) .	25%
Maximum number of Over-allotment Shares(2)	101,789,296
Gross proceeds of the Offer receivable by the Selling Shareholder(1)	A2,986 million
Market capitalisation of the Company at the Offer Price(3)	A11,943 million

Notes:

(1) Assuming no exercise of the Over-allotment Option.

(3) Calculated on the basis of the number of Ordinary Shares in issue on Admission. The market capitalisation of the Company at any given time will depend on the market price of the Ordinary Shares at that time. There can be no assurance that the market price of an Ordinary Share will be equal to or exceed the Offer Price.

⁽²⁾ The maximum number of Over-allotment Shares is equal to 15 per cent. of the Offer Size.

INTERESTS OF THE DIRECTORS AND SENIOR EXECUTIVES

The Prospectus stated that certain Senior Executives might make applications in the Intermediaries Offer and that the number of Ordinary Shares applied for by each Senior Executive would be published in the Pricing Statement. No Senior Executive participated in the Intermediaries Offer.

The Prospectus also stated that the Board had determined that, in order to avoid any potential for a conflict of interest to arise, the Directors should not participate in the Intermediaries Offer. No Director participated in the Intermediaries Offer.

INTERESTS OF SIGNIFICANT SHAREHOLDER

Other than any interest that may arise under the Underwriting Agreement (and assuming no exercise of the Over-allotment Option), insofar as it is known to the Company as of the date of this Pricing Statement, the following person will immediately prior to Admission and/or immediately following Admission be interested in, 3 per cent. or more of the Company's issued ordinary share capital.

	As at the Latest Practicable Date of the Prospectus		Following Admission(1)
Shareholder	Number of Ordinary Shares	Percentage of Ordinary Shares	Number of Ordinary Shares	Percentage of Issued Share Capital(2)
Selling Shareholder(1)	2,710,821,149	99.8688	2,032,225,839	75

Notes:

• (1) The Ordinary Shares owned by the Selling Shareholder (the Minister for Finance) comprise assets of the ISIF. Under the NTMA 2014 Act, these Ordinary Shares are controlled and managed by the NTMA pursuant to directions in writing given to it by the Minister for Finance from time to time. Ownership of the ISIF vests in the Minister for Finance under the NTMA 2014 Act. The Ordinary Shares owned by the Selling Shareholder are registered in the name of a professional nominee for the benefit of the Minister for Finance.
• (2) Before taking into account any Over-allotment Shares pursuant to the Over-allotment Option. In addition, the Minister for Finance will, five Business Days after Admission (or, if Admission does not occur, five Business Days after any future Regulated Market Event), hold Warrants over 9.99 per cent. in aggregate of the issued ordinary share capital of the Company at Admission (or, if Admission does not occur, on any future Regulated Market Event) calculated on the basis that none of the Warrants have been exercised. If the Over-allotment Option is exercised in full, a further 101,789,296 Ordinary Shares will be sold by the Selling Shareholder and the total number of Ordinary Shares held by the Selling Shareholder immediately following Admission would represent circa 71 per cent. of the Company's issued ordinary share capital.

Save as set out above, the Company is not aware of any holdings of voting rights (within the meaning of the Transparency Regulations and Rules) which will represent 3 per cent. or more of the total voting rights in respect of the issued share capital of the Company following Admission. Certain persons may also acquire more than 5 per cent. of the Offer Shares pursuant to the Offer.

DOCUMENTS AVAILABLE FOR INSPECTION

In addition to those documents set out in ''Part XXI: Additional Information'' of the Prospectus, copies of this Pricing Statement are available for inspection in physical form during normal business hours on any weekday (Saturday, Sundays and public holidays excluded) for the life in physical form of the Prospectus at the Company's registered office at Bankcentre, Ballsbridge, Dublin 4, Ireland.

Merrill Corporation Ltd, London 17ZBJ48303