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

As the Deputy is aware, the State has a shareholding of 99.9% in AIB, 14% in Bank of Ireland and just under 75% in Permanent TSB. These are valuable assets to the State and it is this Government's intention that the State will exit these investments in a measured and careful manner. That position has not changed. As I have indicated on a number of occasions, my primary objective in the disposal of these assets will be recovering the maximum amount of money for the Irish taxpayer.

As the Deputy notes, there have been substantial reductions in the value of European banking equities during the course of 2016. The weakness and volatility we have seen reflect market concerns around Brexit and a prolonged period of low and negative interest rates as well as uncertainty around the strength of global economic growth. Clearly, in order for us to proceed with the sale of any of our banking assets, we would need to be satisfied that the market is prepared to put a fair and reasonable value on the business bearing in mind its current performance, its future prospects and the outlook for the Irish economy. Officials in my Department continue to monitor market conditions and the performance of banking equities on an ongoing basis. When I deem conditions conducive to recovering value for the Irish taxpayer, I will move to continue the disposal of these assets in a manner consistent with the plan set out in our programme for a partnership Government.

I have indicated in the past that an IPO is likely to be the optimal route to recouping value from our investment in AIB. At the beginning of this year, officials in my Department appointed an independent financial adviser to assist with analysis and exit planning and much of the initial preparation has now been completed. The reorganisation of the bank's capital at the end of 2015 which allowed for the return of €1.7 billion to the Exchequer and the maturing of the so-called "CoCo instrument" in July of this year, which returned a further €1.6 billion, has now given AIB a simplified, market-facing balance sheet.

The bank's CEO also indicated recently that much of the internal preparation that would be required in advance of launching an IPO process has now been completed.

Additional information not given on the floor of the House

I welcome the bank's continued strong performance, demonstrating sustainable profitability and strong capital generation over a number of consecutive reporting periods. I would also note comments made recently by the bank's chairman, indicating that AIB may be approaching a time when the board will be in a position to consider the payment of a prudent dividend, in consultation with the regulator, which would contribute to the bank's strong investment case.

Bank of Ireland returned to profitability in 2014 and has built on this in both 2015 and 2016. The bank has made significant progress in reducing NPLs and growing new business. PTSB has also significantly de-risked its balance sheet under the intensive oversight of various authorities since 2011 through deleveraging, an improved funding profile and increased capital levels. It has made good progress in reducing arrears and returned to underlying profitability in 2015 for the first time since 2007. Financial results in 2016 to date demonstrate that it is both profitable and capital generative.

Given the improved state of the national accounts, progress made in reducing our national debt and positive market sentiment towards Ireland, we are not under any pressure to monetise our banking investments. As a result we have some flexibility around when we time our disposals in the market. So with market conditions being weak at this juncture, we continue to monitor developments and make preparations with the aim of being ready to take advantage of suitable opportunities or market windows when they arise.

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