Tuesday 23 January 2018

Noonan says sale of €11bn AIB to pay debts is best deal for taxpayer

Finance Minister Michael Noonan has signalled an intention to sell AIB to private investors
Finance Minister Michael Noonan has signalled an intention to sell AIB to private investors
Colm Kelpie

Colm Kelpie

FINANCE Minister Michael Noonan has signalled an intention to sell AIB to private investors, saying it would reap more for the state than relying on a banking debt deal from Europe.

The state has a 99pc stake in the bank, and Mr Noonan eventually aims to sell this to raise money to pay down debt.

The minister said more could be achieved for taxpayers by selling the state's stake on the market - rather than using Europe's bailout fund to cover part of the cost of bailing out the lender.

About €20bn was pumped into both AIB and EBS by taxpayers in the wake of the crash. The state's stake is now valued at about €11bn.

"It will depend on the negotiating position - but I'm coming around to the view that we will probably have a better option of selling AIB over a period of time on the market and using the money to reduce the debt, and we'd probably get more out of it than having a fund controlling AIB which has no banking experience," Mr Noonan, pictured, said yesterday.

As the state virtually owns the lender and holds almost all of the shares, small shareholders will not be the main beneficiary of any sale.

Shareholders saw their investments largely wiped out when the bank's share price collapsed at the height of the crash and the bank had to step in to virtually nationalise the lender. Instead, the main beneficiary will be the taxpayer.

The minister has previously said that the Government could look at lining up a sale of part of its stake in the bailed-out lender before the next election in 2016.

But it isn't clear whether the sale would be to private investors or a larger bank.

AIB chief executive David Duffy said last month that the bank was ready to be sold next year, after it surprised the market with better than expected profit for the first half of the year. It reported profits before tax of €437m, compared with a loss of more than €800m in the same period last year. It was the first profit for the bank since the crash.

Analysts said the results beat expectations and claimed the bank was continuing to "turn the corner" and benefit from an improving economy.

Sinn Fein's Finance spokesman Pearse Doherty accused Mr Noonan of admitting defeat in securing a banking debt deal from Europe.

"This government has failed to convince any of our EU partners that Ireland deserved a retrospective recapitalisation," Mr Doherty said.

"The government let the ball slip through their fingers and now it seems we have confirmation that retrospective recapitalisation is dead."

The €20.7bn rescue of AIB was the second most expensive of the Irish bank bailouts, after Anglo Irish Bank.

The minister said he does not expect any of the Irish banks to need fresh capital, after their financial strength is "stress tested" by European banking authorities later this year.

Irish Independent

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