Friday 30 September 2016

State fund has clawed back €6.4bn from bank rescues

Published 25/03/2016 | 02:30

According to the latest figures, the Government's more than 99pc stake in AIB was valued at €11.7bn at the end of last year. Photo: Reuters
According to the latest figures, the Government's more than 99pc stake in AIB was valued at €11.7bn at the end of last year. Photo: Reuters

A tenth of the cost of bailing out the banks has been recovered by the former National Pension Reserve Fund (NPRF) to date, according to new figures.

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During the crash the fund was raided to the tune of €20.7bn to help prop up the country's two biggest banks.

So far, €6.4bn of that has been recovered from the sale of stakes and assets linked to Bank of Ireland and AIB, according to a financial update from the Irish Strategic Investment Fund (ISIF) published yesterday.

The fund has taken over the Government's stakes which had been held through the old NPRF. The figures do not include the residual value left after bailing out other banks including the former Anglo Irish Bank, Irish Nationwide Building Society, or the value of the State's stake in Permanent TSB.

According to the latest figures, the Government's more than 99pc stake in AIB was valued at €11.7bn at the end of last year.

That was up 25pc compared to a year earlier - and in the meantime taxpayers have recouped the first substantial tranche of cash since the bailout from AIB.

In December last year the bank paid the State €1.9bn after a deal to redeem part of the €3.5bn of so-called preference shares, or emergency loans, originally used to bail it out.

The latest figures from the ISIF valued taxpayers' remaining 14pc stake in Bank of Ireland at €1.5bn at the end of last year.

However, that was based on a share price of 34 cents a share in December that was substantially above the 26 cents each level where the stock closed last night.

In the case of AIB, ISIF's €11.7bn valuation is calculated based on a price of €4.33 a share - which is substantially different to the trading price at the end of the year, reflecting the reality that despite a reorganisation of shares last year, the trading price is still not regarded as an effective gauge of the bank's value. The valuation is a pointer to how much acting Finance Minister Michael Noonan would have hoped to raise from a stock market listing of 25pc of AIB that is pencilled in for later this year. But any such plans are subject to the formation of a new government and market sentiment.

ISIF holds the bank stakes on the orders of the Government and will only sell them at the say so of ministers.

The fund was launched with huge fanfare in 2013 by the Fine Gael-Labour coalition with the aim of unlocking wealth stored in the NPRF to kick-start building and other jobs friendly investment schemes in the domestic economy.

The figures published yesterday show that so far just a fraction of the funds managed by ISIF have been committed to job creation projects so far.

So far just €2.1bn of the €7.8bn of ISIF funds not tied up in bank shares, and therefore potentially available to invest, have been committed to specific investments aimed at stimulating employment.

Last year ISIF said it could take up to five years for the full €7.8bn to be invested into the Irish economy.

Irish Independent

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