Business Irish

Tuesday 30 September 2014

Taxpayers' AIB stake worth up to €11bn – Noonan

Minister bases figure on 'independent valuation'

Nick Webb Business Editor

Published 14/04/2014 | 02:30

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Finance Minister Michael Noonan
Finance Minister Michael Noonan

STATE-OWNED AIB could be worth between "€10bn and €11bn", according to Finance Minister Michael Noonan. This is the first time that the Government has revealed what its stake in AIB could be worth.

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The bank, which was bailed out with over €20bn of taxpayers' funds, has been "independently valued", the minister said. Overall, the taxpayer injected €63bn to save the banking sector following the 2008 crisis. Some €32bn of this relates to Anglo Irish Bank, which is highly unlikely ever to be recouped.

Last month, Mr Noonan indicated that the Government may "test the market" before the next election to establish a valuation for AIB. However, any move to sell a stake will not happen before the balance sheet stress tests, which are due later this year.

Mr Noonan told the Dail that the Government did not have a long-term interest in holding State banks, adding: "We will restore the banks to the private sector in due course."

He said: "The message isn't so much that we're going to sell the banks; the message is that the policy is we won't continue with State banks in the medium term. We'll get private investors in."

He was "encouraged" by AIB's progress but said the first priority was to see the bank return to profitability and address its legacy issues.

He continued: "In time, this should enable the State to be in a position to exit part of its investment in the bank, should we wish to do so."

In February, it emerged that a Gulf sovereign wealth fund had made a €500m offer to buy a stake in AIB. The "tentative" approach had been made in September by an unnamed "sovereign wealth fund". The approach was rebuffed at an early stage.

"They said they had half-a-billion available if we were interested in selling a small amount of AIB shares, but we weren't, so we didn't pursue it," Mr Noonan told the Irish Independent in February.

"We weren't interested at the time, so we simply said, 'No, there's nothing for sale.' We didn't pursue it.

"We didn't get to the point of even knowing what percentage of share they were even looking for, so it was hard to price it too."

The Finance Minister has also opened up the possibility of offloading the taxpayers' remaining shareholding in Bank of Ireland. The State has a 14 per cent equity holding in the bank and the market value at 33c a share is €1.5bn.

"Any decision to sell this stake will be a question of price," Mr Noonan suggested.

Bank of Ireland is now valued at €1bn more than taxpayers invested in it in value terms, he told guests at the Sunday Independent Business forum last week.

International investors, including Wilbur Ross and Prem Watsa, spent €600m buying a stake in Bank of Ireland in 2011. Last month, Ross and Watsa slashed their shareholding in the bank by selling a 6.4 per cent chunk for around €690m. They retain a a 12 per cent stake in Bank of Ireland, worth around €1.2bn.

The massive profits generated by Ross and Watsa sparked debate about whether the Government here had allowed Bank of Ireland to be sold too cheaply during the financial crisis.

Sunday Indo Business

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