Wednesday 21 February 2018

Billions wiped off State bank shares in 2016

Finance Minister Michael Noonan Photo: Tom Burke
Finance Minister Michael Noonan Photo: Tom Burke
Colm Kelpie

Colm Kelpie

The value of taxpayers' stakes in the main banks has fallen by billions of euro since the start of this year, according to papers prepared for the new Government.

The equity value of State-owned AIB has fallen significantly this year and it will take up to 15 years to re-privatise the lender, the Department of Finance has said.

Officials said that weak markets had cut the equity value of the bank to €9bn to €10bn from €11.7bn at the end of last year.

"Any recommendation to proceed with an exit event will be predicated on a recovery in stock market conditions and investor sentiment," the 184-page briefing note, presented to Finance Minister Michael Noonan on his recent reappointment, said.

The State pumped €20.7bn into AIB, its chief executive estimated in December that it would take five to 10 years for the Government to sell its shareholding.

Michael Noonan has since delayed an initial 25pc sale until 2017 at the earliest due to unfavourable market conditions.

The value of shares in majority State-owned Permanent Tsb is down 53pc so far this year while 14pc owned Bank of Ireland has fallen by 21pc.

Officials said a merger deal could be considered to ensure the viability of Permanent Tsb. A merger could drive value and improve long-term viability, without giving any details.

A deal could see the bank link up with Ulster Bank or KBC, market sources said.

For Bank of Ireland, the objective is to sell the remaining State-owned shares without compromising the value of the other banking investments.

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