Michael McGrath (Cork South Central, Fianna Fail)
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1. To ask the Minister for Finance his plans for the future of the State's ownership of AIB; the reason for his recent comments in relation to the price of AIB shares; his plans to dispose of a stake in the bank in 2015; how the proceeds of any such sale would be used; and if he will make a statement on the matter. [46375/14]

Michael McGrath (Cork South Central, Fianna Fail)
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The purpose of my first question is to establish the Minister's intentions regarding the State's ownership of AIB in view of the appointment of a panel of professional advisors to assist in the possible sale of a stake in the bank and the Minister's recent comments about the share price. I am hoping the Minister will give some clarity on his intentions in the short and medium term regarding our holding at AIB.

Michael Noonan (Limerick City, Fine Gael)
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AIB's return to profitability is good news from the perspective of the Irish taxpayer, as it enhances the value of the bank for the taxpayer. The last valuation of our AIB shares, which was carried out by the National Pensions Reserve Fund Commission, NPRFC, at the end of 2013, valued the State's ordinary and preference shareholding at €10 billion. Including the contingent convertible capital notes, or CoCos, that we hold, this brings the value of the State's shareholding to €11.6 billion. Since then, bank stocks in many eurozone countries have performed well, and with AIB itself performing strongly I would be confident that the current value of AIB is greater than the NPRFC valuation at the end of 2013.

Now that the bank has returned to profit, is on a stable path and has passed the ECB's comprehensive assessment, my officials will engage with the management team to explore how we can reconfigure the bank's capital structure to make it fit for purpose. The regulatory rules and expectations have changed dramatically in the past couple of years and we need to lay out a plan to position the bank for this new environment. As part of this process we hope to agree a roadmap that will see the bank start to return cash to the State so that we can begin the process of repaying the taxpayer's large investment.

With respect to the State's shareholdings or ownership in the banks, Government policy remains unchanged - namely, that 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 last 18 months the State has exited successfully from some debt investments with the sale of our CoCos and preference shares in Bank of Ireland, in addition to the sale of Irish Life. Given the significant cash resources we hold, we are not under any immediate pressure to exit our remaining investments. However, given where our national debt is, neither do we have the luxury of holding on indefinitely.

We are not making any decisions with regard to reducing our ownership in the bank now, because, as I have just outlined, we have important decisions to make about how we should best reconfigure our existing investments in a way that benefits both the bank and the taxpayer. That is our main priority in the coming months. If we can deliver on this work programme next year and everything else develops as we would like, then we may be at a point at which we can consider selling some of our shares.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. Does the Minister believe that the State will recoup all of the €20.8 billion that was injected into AIB? He has just said that he believes the current valuation of AIB is in excess of the €11.6 billion figure that the NPRFC put on the bank at the end of 2013. When I quizzed the CEO of AIB, Mr. David Duffy, at a recent meeting of the Joint Committee on Finance, Public Expenditure and Reform, he expressed the belief that within a ten-year period all of the money should be repaid to the State. I would like to hear the Minister's views on that issue. My view on the State's shareholding is that while I would not necessarily be opposed to selling a minority stake in the bank, I believe there is real long-term value for the State in holding at least some equity interest in AIB. It is a recovering bank in a recovering economy and is making significant progress. The best prospect for the State in terms of recouping all the money is to at least retain a significant shareholding in the bank for a number of years. I would welcome the Minister's views on that issue.

Michael Noonan (Limerick City, Fine Gael)
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I have given the values as estimated by independent valuers. Since the valuations were made at the end of 2013, the bank's position has improved in terms of both profit and market share. Things are going quite well for AIB. It is hard to say exactly what it is worth, but I believe, as does the CEO of the bank, that taxpayers will get all their money back in due course, although it is difficult to say over what period of time.

No firm decisions have been made about the sale of AIB or a minority shareholding in AIB. We will do the preparatory work first, and then there may be a possibility of a sale towards the back end of 2015 or in the course of 2016. We do not have an agreed timeframe for that. We will appoint an advisor, take the advice, reconfigure the bank's shares and move on then. There are issues such as the preference shares and CoCos that must be dealt with, as well as the normal equity. There is a series of issues on which we need to take advice and to make decisions, but we are not rushing it.

Michael McGrath (Cork South Central, Fianna Fail)
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I am glad to hear that the Minister is not rushing it, because there is no need to rush it. The State came to AIB's rescue in its hour of need and injected an absolutely colossal amount of money to save the bank - almost €21 billion. People will be glad to hear that over time, albeit an indefinite amount of time, the State will recoup all of that money; the sooner the better, of course, for the sake of taxpayers and our national debt.

If a decision is made to sell some of the State's stake in AIB on the open market, to what use would the proceeds be put in terms of coming into the central Exchequer?

Would they be used to pay down debt, improve the State's capacity to invest in employment initiatives and so forth? The Minister indicated he is preparing the ground for a possible sale of some of the bank next year and given that he believes it is worth in excess of €11.5 billion at this stage, a 20% or 30% stake sale could raise significant moneys for the State. I appreciate it is early days yet but to what use would such moneys be put?

Michael Noonan (Limerick City, Fine Gael)
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It is the intention of the Government and there is a Government decision that it would be used to pay down debt but if it goes to 2016 it will be for the Government in 2016, whoever composes it, to make the decisions. We are doing the preparatory work now. We have a valuation on the bank but the real valuation will be after some shares are sold. If, for example, the State was to sell 25% of it, we would have market valuation on the other 75%, so we would be in a better position. Once there is a market value, we would not be relying on estimates any longer.