Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As the Deputy will be aware, the taxpayer has made a very substantial investment in AIB and it is critical that we carefully examine all possibilities open to us to ensure this investment is protected and enhanced with a view to ultimately generating a return for the State.

The return to profitability by AIB in the first half of 2014 is good news from the perspective of the Irish taxpayer as it enhances the value of the bank for the taxpayer, which will over time allow the State to maximise the return on its investment. The latest valuation of the AIB shares was carried out by the National Pensions Reserve Fund Commission, NPRFC, at the end of 2013, and this valued the State's ordinary and preference shareholding at €10 billion. Including the contingent capital, CoCo, this brings the value of the State's shareholding to €11.6 billion. Since the previous valuation of the State's holding, bank stocks in many eurozone countries have performed well. AIB has posted a profit in mid-2014  and I would therefore be confident that the value of AIB has also increased.

With respect to the State's holdings in the banks, Government policy remains unchanged and we do not wish to hold these investments in the banks over the long term. Subject to market conditions, therefore, we are willing to exit in a manner that maximises value for the taxpayer.

In the past 18 months the State has exited successfully from some debt investments with the sale of the BOI CoCo and preference shares in addition to the sale of Irish Life. Holding our equity investments longer enables the State to benefit from the economic recovery and fortunately given the significant cash resources we hold, we are not under pressure to exit these remaining investments.

The bank engages regularly on a range of issues including  the financial performance of the bank, strategic objectives and its capital structure with officials from the shareholding management unit in my Department who are charged with this responsibility.

In recent months, the Department of Finance has been engaged in a process to appoint panels of financial advisers to assist in the receipt of timely advice relating to the future disposal of the State's banking sector investments, and other ad hocassignments that may arise from time to time.

Additional information not given on the floor of the House

The Department has had the need for advice in the past and will continue to have a requirement in the future and the appointment of these panels is prudent planning to ensure the State is in a position to receive necessary advice in a timely and cost efficient manner. While I have said previously in respect of AIB that we may wish to test the market next year, the creation of these panels should not be seen as a signal that a transaction is imminent or indeed will happen at all.

There are three panels for the provision of the following services: panel 1 - capital markets, strategic, M&A and restructuring advice; panel 2 - general financial advice; and panel 3 - capital markets distribution services. The process, which is in line with the open procedure of EU procurement legislation, is well advanced and the Department expects to be in a position to publish the list of successful tenderers to each panel shortly.

See this speech in context