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

The State's shareholding in Allied Irish Banks is a valuable asset and it is the Government's intention that the State will exit this and our other banking investments in a measured and careful manner.

The advice I have received confirms that an initial public offering, IPO, is the optimal route to recouping value from this investment. Officials in my Department along with our independent financial adviser, Rothschild, have done considerable preparatory work in this regard. In December of last year, following a competitive procurement process, three investment banks were appointed to act as global co-ordinators on a potential selling syndicate in preparation for a possible IPO. These banks have been appointed for an 18 month period and additional banks will be appointed to fill out the syndicate at an appropriate future date.

A number of factors will need be taken into consideration before a decision is made to proceed with an IPO. These include the operational performance of the bank, the preparedness of the bank for privatisation and whether market conditions are conducive to achieving our long-term objectives. As I have stated previously, my primary objective in the disposal of any AIB shares will be to maximise the return for the State in a manner that is consistent with recovering our full €20.7 billion investment.

The reorganisation of the bank's capital structure in 2015 and the maturing of the CoCo instrument in July of last year have given AIB a simplified market-facing balance sheet. I welcome the bank's continued strong performance, demonstrating sustainable profitability and strong capital generation over a number of consecutive reporting periods. The bank's chief executive officer has indicated publicly, and reiterated to me personally, that much of the internal preparation that would be required in advance of launching an IPO process has now been completed. I 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.

In order for us to proceed with the sale of any of our banking assets, we 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 economy. Officials in my Department continue to monitor market conditions and the performance of banking equities on an ongoing basis. While I cannot predict what market conditions will be like for bank shares over the coming year, it is our intention to be ready to execute a transaction if conditions allow. 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.

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