The Government has fired the starting pistol on a stock market flotation of AIB, the biggest bank to remain in State hands after the Crash, but it could still be as late as 2018 before a deal is done.
The move is a concrete step in what has been a long delayed move to reduce the State's holding in AIB. The Government owns more than 99pc of AIB since it pumped around €21bn into the bank to save it from collapse after the financial crisis.
Minister for Finance Michael Noonan has held off on firing the starting gun on an AIB listing for more than a year, citing market conditions. London-based Rothschild has already been hired to monitor market conditions for the State.
"My officials have commenced a competition process to procure Joint Global Coordinators to enable a potential Initial Public Offering of shares in AIB to the market.
"While there is no fixed timetable for a sale at this time, given the long lead times involved in such a process this appointment is a necessary next step in order to provide the State with the option to sell some of the State's shareholding in AIB during 2017 or indeed early 2018," Mr Noonan said in a statement.
"Such a sale is provided for in the Programme for a Partnership Government and the ultimate decision will be subject to a range of factors including prevailing market conditions, but the overriding consideration will be whether any transaction is likely to maximise the return for the State," he said.
There is no realistic prospect of recouping all of those bailout costs in the short term.
The State holding in the bank was valued at €12.2bn at the end of June. The Government plans to sell a 25pc stake in the bank to institutional investors, and to use the proceeds to reduce the national debt.
Based on the most recent valuation the sale would raise €3.3bn, however, the price is likely to have declined since then, in line with nearest peer Bank of Ireland and other European banks, notably including Deutsch Bank, which have seen their shares come under pressure over fears lenders are struggling to make profits as long as official interest rates remain at historic lows.
Mr Noonan has insisted the full bailout cost will be recovered over time.
The bank has returned €1.8bn to the State, of debt issued as part of the bailout, and a dividend.
The Department of Finance said yesterday that it had commenced a competition to appoint investment banks as "global coordinators" to act as part of a banking syndicate of advisors to manage the sale of shares in the bank. An appointment will be made in the New Year, the Department said.
The syndicate of banks managing a stock market flotation typically underwrites the share sale, guaranteeing that funds will be raised once the process gets under way. The Department of Finance is likely to favour a mix of international and domestic advisors to act on what will be the biggest stock market privatisation deal since Eircom was listed back in 1999.
The minister has long committed to selling all State holdings in rescued banks over time, as well as almost all of AIB taxpayers remain the biggest shareholders in Bank of Ireland and Permanent TSB, all as a result of Crash era rescues.
In addition, since the crash the Government has establish the Strategic Banking Corporation of Ireland (SBCI), which mainly act as a funder of lenders and has been set up to remain a State agency.