Friday 21 October 2016

C&AG says bailout will cost €8bn more than Noonan claims

Published 30/09/2015 | 02:30

Michael Noonan estimated the final bailout cost at €30-35bn
Michael Noonan estimated the final bailout cost at €30-35bn

The bank bailout will end up costing the country around €43bn, according to the State's spending watchdog - which is at odds with figures given by the Finance Minister.

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The assessment by Comptroller & Auditor General Seamus McCarthy does not tally with figures given by Michael Noonan at the Oireachtas Banking Inquiry earlier this month.

A total of €64bn has been pumped into the banks since the sector collapsed. But Mr Noonan estimated the final cost of the bailout would be between €30bn and €35bn.

He told the Banking Inquiry he was making that assessment based on the best information available to him.

However, the figures were contradicted by Mr McCarthy, who believes the costs will be at least €8bn higher than the assessment given by the minister.

In his annual report on the accounts of the public services, he said: "By the end of 2014, the estimated net cost to the State of measures taken to stabilise the banking system was just under €60bn."

He said this was offset by the estimated €16.7bn value of the State's shareholding in AIB, Bank of Ireland and Permanent TSB, which are earmarked for sale. This would leave the estimated net out-turn at €43bn, said Mr McCarthy.

The C&AG also warned that the costs of the stabilisation measures would continue to grow each year as the State continues to service associated debt.

Mr McCarthy estimated debt servicing would cost €2.3bn in 2015.

The bulk of this debt servicing will be in respect of the Irish Bank Resolution Corporation (IBRC), which will account for around €1.2bn, and AIB, which will account for around €900m.

However, he accepted this would be offset by income earned by the Central Bank on IBRC-related Government bonds, provided the Central Bank continues to hold on to these.

In making his calculations, Mr McCarthy said he was not taking into account any return to the State from Nama, which could end up being €1bn.

According to the C&AG's report, Nama's financial statements from 2010 to 2014 showed accumulated losses of €126m.

"Nama has, however, indicated that it anticipates making a surplus of approximately €1bn when it is wound up," said Mr McCarthy.

Also excluded from the calculations is any potential surplus from the sale of the IBRC.

The report said additional State borrowing undertaken as part of the bank bailout had already cost close to €9bn to service.

Irish Independent

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