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

The taxpayer has made a very substantial investment in AIB and it is critical that we carefully examine all possibilities to ensure this investment is protected and enhanced, with a view to ultimately generating a return for the State. Officials from the shareholding management unit in my Department are charged with this responsibility and continue to engage with the bank on a regular basis on a range of issues, including the financial performance of the bank, strategic objectives and its capital structure.

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. 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. I have said previously in respect of AIB that we may wish to "test the market" next year, but the creation of these panels should not be seen as a signal that a transaction is imminent or will happen at all. There are three panels for the provision of the following services. Panel No. 1 deals with capital markets, strategic, mergers and acquisitions and restructuring advice; panel No. 2 deals with general financial advice; and panel No. 3 deals with 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.

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

Additional information not given on the floor of the House

We have already exited some of our debt investments with the sale of the Bank of Ireland contingent convertible notes 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 the remaining investments.

With regard to AIB, the return to profitability is very good news from the perspective of the taxpayer, as a profitable bank is a more valuable bank, 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 at the end of 2013 and it valued the State's ordinary and preference shareholding at €10 billion. Including the contingent capital, this brings the value of the State's shareholding to €11.6 billion. Since the last valuation of the State's holding, bank stocks in many eurozone countries have performed well. AIB posted a profit in mid-2014. I am confident, therefore, that the value of AIB has also increased.

See this speech in context