Business Banking Inquiry

Saturday 17 March 2018

State could make €2bn bank profit, excluding costs of rescuing Anglo

Ann Nolan, Department of Finance on the right.
Ann Nolan, Department of Finance on the right.

Clodagh Sheehy

Ireland could make a €2bn profit from Nama and the sale of shares in bailed out Bank of Ireland and AIB, the deputy head of the Department of Finance said.

Ann Nolan told the Banking Inquiry that the long-term cost of the Bank Guarantee would be associated with Anglo Irish bank but "the country will probably get its money back on the 'living banks.'

"We won't get anything back from Anglo but we might even make a small profit here and there, you know, €1bn on Nama €1bn maybe on maybe AIB… Bank of Ireland shares," she said.

"We might make a bit of a profit eventually on AIB, I don't know, it depends on how we sell them and how the timing goes," she said in response to questions from Deputy Kieran O'Donnell. Nationalising Anglo Irish Bank earlier would not have made a difference to the outcome, she said.

Ireland could have saved about €3bn by burning Anglo Irish Bank bondholders but the United States had used its veto at the IMF to stop this, the Inquiry was told.

"I certainly think, if there had been no veto, burden sharing in Anglo would have happened," she added.

In relation to Anglo Irish Bank, she said the Department did not feel it could recommend recapitalisation of the lender "without taking complete control as we had no trust in the organisation".

It was decided to nationalise and replace the Board and management "because of the nature of the issues we had with Anglo" she added. She told Deputy Joe Higgins that she did not believe banks had lied to the Department about their financial position in 2008.

The stress tests at the time were not sufficient to measure the depth of the stress, she said.

The banks did not know the position themselves, she said.

She described Bank of Ireland as the "most realistic".

AIB was the "alpha male" and said it didn't need any capital.

Anglo had said it would get the money from the private sector "but that never materialised".

Asked by Senator Susan O'Keeffe about Central Bank Governor Patrick Honohan's call to RTE revealing the bailout, Ms Nolan said it pre-empted a government decision but in some ways it made no difference.

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