Michael McGrath (Cork South Central, Fianna Fail)
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This is the first time I have faced the Minister, Deputy Noonan, across the floor of the House since he made the statement about his medical condition. I genuinely want to wish him all the very best in his recovery.

The issue I raise concerns the sale by one of Bank of Ireland's largest shareholders, Wilbur Ross, of his entire shareholding in the bank, and in particular the implications that may have for the State's continuing shareholding in the bank, which now lies at approximately 14%. Obviously, the headlines are being dominated by the handsome profit Wilbur Ross made on the financial investment in Bank of Ireland. I will not pass judgment on that issue because, back in the summer of 2011, there was not exactly a queue of international investors willing to invest in Irish banks. He took a punt, took a risk, and it has certainly paid off handsomely for him. It is for other market analysts to assess whether the appropriate price was paid at that time.

The decision he has made to sell his entire shareholding in Bank of Ireland does, of course, raise some concerns, given it comes on the eve of the first European-wide stress tests, and Bank of Ireland is one of the banks to be covered by those stress tests. Today, I spare a thought for the many thousands of ordinary shareholders in Bank of Ireland, who lost everything on their investment in its shares and, indeed, the shareholders in the other banks, who also lost everything prior to the virtual collapse of the banks and their share prices back in 2008.

The issue I want to focus on primarily is what are the implications for the State in terms of its 14% shareholding in Bank of Ireland. Clearly, given that over recent months a large stock of Bank of Ireland shares has been traded on the open market, I assume this has the direct effect of making it far more difficult for the State to dispose of its shareholding on the market if that is what the Minister was minded to do at this point in time, and, therefore, the sale of Wilbur Ross's shares will inevitably result in a delay in the State's disposal of its shareholding in Bank of Ireland.

What is the Minister for Finance's position as shareholder in Bank of Ireland on behalf of Irish taxpayers in terms of the disposal or retention of that shareholding for a period of time? In the context of the Government's efforts to secure retroactive bank recapitalisation, what is the position in regard to our shareholding in Bank of Ireland and also in regard to AIB? Is the Minister actively pursuing the option of disposing of some of our shares to the European Stability Mechanism, for example, in order for it to hold those shares and to have the result of essentially reimbursing Irish taxpayers in full or in part for the investment that was made in the Irish banks at the time the recapitalisation of those banks took place?

Given the very significant transaction which has taken place today - the disposal of Wilbur Ross's entire shareholding in Bank of Ireland - and despite the bank's description in 2011 of him and the other investors at that time as being long-term value investors, clearly that has not proven to be the case. His focus as an investor is on distressed assets, and he has worked the markets very well in this case and made a handsome profit.

My focus is on the State's position in respect of our 14% shareholding, the impact of today's transaction on that and the Minister's attitude to the retention or disposal of those shares.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for raising the issue and for his personal good wishes to me. As the House will no doubt be aware, it was announced yesterday evening that a significant shareholder in Bank of Ireland, Wilbur Ross and Co, was selling the remaining 1.8 billion shares it held in the bank by way of a placing in the market. Subsequently, it was confirmed this morning that Mr. Ross's shares have all been sold at a price of 26.5 cent per share generating proceeds of €475 million. Mr. Ross has now sold his entire investment in the bank and will now step down from the board of Bank of Ireland.

It is worth recalling that the State secured this investment for Ireland at a time when few other investors were prepared to invest. The State has benefited from the large private sector investment in Bank of Ireland. This investment reduced the risk the taxpayer had to take on board back in 2011 to support the banking sector at what was a very difficult time for the State.

Ireland is now in a completely different place. Slowly but surely our reputation has been restored and Mr. Ross's investment has been followed by billions of euro worth of investment from others into Ireland, particularly in the past 12 months. There is no doubt that this investment in 2011 was a significant boost to the Irish economy and garnered investor confidence in the recovery. As a result of the billions of euro in investment secured since 2011 we have managed to remove significant risks to the Irish taxpayer.

The liquidation of IBRC has been very successful with 90% of the assets being sold to private investors to date. NAMA has attracted significant investment and the chairman informs me that it will have repaid 50% of its senior debt by year end - two years ahead of target. Investment interest in Irish assets remains strong, our credit rating has been upgraded by all the rating agencies. For example, we are now rated A by Standard & Poor's.

The recovery in the bank's share price since mid 2011 has benefited the taxpayer directly in a very tangible way. The recovery enabled the State to exit its coco and preference shares in the bank at a profit while our remaining equity investment is worth €1.2 billion. As I said last December, when one includes the income received by the State for the guarantees it provided, the State has recouped a net positive cash return of over €1 billion from its overall support and investment in the bank and this is before one takes into account our remaining shares.

Bank of Ireland is now profitable and generating capital while I am pleased to say that our investment in AIB is also making similar progress. The State remains an important and supportive shareholder in the bank and we will manage this investment in the best interests of the taxpayer. How does this particular transaction influence our investment? Well it is certainly encouraging that such a significant amount of shares could be sold in the market and it fully removes the perception of an overhang from Mr. Ross. This is, after all, the third successful placing of shares in the bank in the past six months so it really demonstrates a continued very strong interest in Irish assets.

It also improves the depth and spread of shareholders in the bank which augurs well for when we decide to sell some or all of our stake. I note the comments from Fairfax Financial Holding's CEO, Mr. Prem Watsa, one of the other investors from the 2011 consortium, about him being a long-term shareholder in the bank. That should help minimise any short-term indigestion in the market for the shares in the coming weeks. Finally, when it comes to our remaining shares, we will bide our time and I have no current plans to start selling down our investment.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his response. I accept that overall, the State will have made a profit on its rescue of Bank of Ireland a number of years ago. That is to be welcomed. I wish that was the case in respect of the other banks but that is certainly not the position at this point in time.

I will take the Minister up on his observation regarding the comments from the CEO of Fairfax Financial Holdings, Mr. Prem Watsa, about him being a long-term shareholder in the bank. I remind the Minister that Wilbur Ross said something similar about three months ago when he sold many of his shares in Bank of Ireland. He put on the record then that he had no intention whatsoever of selling the remainder of his shareholding so we must take some of these statements with a pinch of salt. These are investors who will sell at what they regard as the opportune time to maximise the return they get from their investment. It is the Minister's job as the guardian of taxpayers to ensure we are getting the best return as a state for our investment in Bank of Ireland. I accept his statement that we will bide our time. I would interpret that to mean that there will certainly be no short-term sale of the State's shareholding in Bank of Ireland.

I expect that it would certainly not be in advance of the ECB stress tests which will take place over the next number of months but I would like the Minister to comment on the ongoing efforts by the Government to secure retroactive recapitalisation of the banks. The Minister is pursuing that at European level with his colleagues on Ecofin. Where does that negotiation effort sit alongside the Minister's decision-making strategy concerning Bank of Ireland and the other banks? We want to ensure that the Minister is getting the best return possible for the shares we currently hold in the banks but we also want to ensure that our European partners step up to the mark and fulfil their responsibilities relating to the two year old commitment in respect of the separation of banking debt from sovereign debt.

Michael Noonan (Limerick City, Fine Gael)
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Investors buy shares to make money. They do so to avail of a dividend or, alternatively, capital gains. With distressed assets, investors usually go in for the capital gains that may accrue. It is worth pointing out that the purchasers of the shares this morning are also private investors so there is no diminution of the private investor share. It has just moved from one single investor to a number of private investors who paid what they thought was value in the market at 26.5 cent per share. One can debate whether or not 10 cent was a very low price on offer in the first instance but it went from 10 cent on the open market to 8 cent and stayed there for about six months. At one period, it traded at 7 cent. If anybody is very wise in retrospect, they should have been wise at the time, bought the shares at 8 cent and made even more than Mr. Ross made on the transaction.

In talking about retrospect capitalisation, the Deputy is really stitching a major issue on to the tail end of a debate on a Topical Issue. If he raises it in the next round of finance questions, we could have a full discussion on it but we do not really have time to do this issue justice today. It is still being pursued.