Paul Murphy (Dublin South West, Socialist Party)
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5. To ask the Minister for Finance if he will report on the appointment of a banking firm (details supplied) as advisers on the sale of the State's share in AIB; his views on the matter of the sale of the State's stakeholding in the banks; and if he will make a statement on the matter. [4709/15]

Paul Murphy (Dublin South West, Socialist Party)
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I ask the Minister for Finance to report on the appointment of Goldman Sachs as advisers on the sale of State's share in AIB, and to make a statement on why Goldman Sachs was chosen and on his views of the sale of shares in the banks.

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware the Irish banking system is in a much stronger position than it has been in recent years. Profits are recovering, balance sheets have been restructured and we have started the process of returning cash to the taxpayer following the huge investments that were made over the 2009-11 period.

Much of the banking-related work in the Department of Finance this year will focus on AIB. Given the scale of the State's investment - some €20.8 billion - and the range of options available to recoup value from the bank, officials within my Department are working with AIB on reconfiguring its capital structure. Goldman Sachs International has been appointed to provide financial advice to the Department in this regard.

The appointment follows the establishment by the Department last year of three separate panels of financial advisers. These panels were put in place to facilitate the provision of timely advice in relation to our banking investments though the panels are available for the wider Department to use in other areas if deemed necessary.

The award of the current contract followed a competitive tendering process with each of the eleven firms on Panel 1, which covers capital markets, strategic, M&A and restructuring advice, being invited to submit a tender. Prior to the year end, each of the firms accepted the invitation and the tendering process included face-to-face presentations by each of the firms to a panel of Department of Finance officials. Arising from these presentations, each of the firms was scored across a number of standard criteria with Goldman Sachs International being adjudged to have achieved the highest aggregated score. Accordingly, it was awarded the contract.

The focus will be on ensuring that the best decisions are made regarding potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer. All options remain on the table and it is too early to specify what steps will be taken next or to put a timeline on decisions.

As I have previously stated on numerous occasions, Government policy is that we will not remain a holder of our banking investments in the long term. Given our high debt-to-GDP ratio, we do not have the luxury of holding all of these investments indefinitely and I envisage receipts from the gradual sale of these investments helping to play their part in reducing the State's overall debt burden in the coming years.

Paul Murphy (Dublin South West, Socialist Party)
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Why does the Minister think that Goldman Sachs has agreed to this on a pro bonobasis similar to four other groups on the panel he mentioned? Was it simply because they are nice, kind people and they want to help us out bearing in mind that an article in Rolling Stoneaccurately described them as "a great vampire squid wrapped around the face of humanity relentlessly jamming its blood funnel into anything that smells like money"? Could this perhaps smell like money? Is there not a clear conflict of interest given the fact that Goldman Sachs advises so many investors, which at a later stage may look to buy bank shares? Is the company doing this pro bonobecause it will gain access to confidential information, which it can later use for its own financial advantage? The conflict of interest is blatant given the company's history, including being found guilty of defrauding investors in the US and playing a role in the Greek debt crisis. Why would the Minister trust this company to do this without seeking its own return?

Michael Noonan (Limerick City, Fine Gael)
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I am not sure of the weight that should be attributed to Rolling Stonemagazine in terms of being a financial adviser. If it was me, I would telephone Mick Jagger rather than read the magazine if I was looking for financial advice.

Dara Calleary (Mayo, Fianna Fail)
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Has the Minister his number?

Michael Noonan (Limerick City, Fine Gael)
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The position is that we anticipated a year or so ago that we would have a need for advice and three panels were put together of possible advisers with different areas of expertise. The panel from which we were getting advice to restructure AIB had 11 advisory groups on it, including Goldman Sachs. All 11 tendered and there was an objective selection process. Goldman Sachs was marginally first on the aggregate score. I had no involvement in this whatsoever. I was simply told the result of the competition and I agreed to the proposal that Goldman Sachs, because it had come out of the competition, should be the winner. Five of the 11 groups that tendered offered to do the work for nothing. It is common practice seemingly, especially in the city of London, that finance houses such as Goldman Sachs feel their reputation will be enhanced for other work if they act as advisers to sovereign governments for key pieces of work. An IPO to sell even 25% of AIB would be one of the biggest ever on the London stock market and obviously great attention would be paid to who are the advisers.

There is no commitment at the point of sale that Goldman Sachs will get additional work. There will be a separate tendering process for the advisers that are required. Goldman Sachs is retained to advise on the restructuring of the bank and when that work is finished, any new work will have to be re-tendered.

Paul Murphy (Dublin South West, Socialist Party)
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It is naive or disingenuous to consider that Goldman Sachs staff are just interested in the high visibility work and that it does not enter their minds that future clients will say Goldman Sachs saw the inside of AIB and that will encourage them to go to the company rather than another firm.

I refer to another aspect of this. Is this an admission that the Minister is giving up on the retrospective recapitalisation of the banks? He has come into the House on numerous occasions and said that once the SSM is set up, we can apply. He has still not applied through that. Government sources are reported as saying Ireland has little or no chance of ever recouping the billions of euro pumped in to rescuing the banks from Europe. Is this the wrong moment to make that admission and to accept that defeat, particularly in the context of the previous questions around the election of Syriza and the change that will make to the European picture, including the possibility of a European debt conference? Surely now is not the moment to sell to private investors and lose State control over a key bank. Instead, the Minister should seek retrospective recapitalisation.

Michael Noonan (Limerick City, Fine Gael)
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I have answered this question on innumerable occasions. The Government's policy position is that we do not intend retaining the banks and, in particular AIB, in public ownership indefinitely but indefinitely could stretch out a long way. I have been advised by my Swedish colleague that the last of the shares held by the Swedish Government in its banking system following the country's banking crisis in the early 1990s was only disposed of in the second half of last year, more than 20 years after the event. We are not talking about a sudden sale or a fire-sale; we are talking about getting the bank's books in order so that it is structured in a way that it is saleable and then we will consider best advice on what quantum we will put on the market. That does not mean that we have abandoned the idea of a retrospective or retroactive recapitalisation. The same initial mechanism is involved whether we sell on the market or to the ESM. They give us money for shares and whether it is the market or the ESM, it is an exchange of money for shares. I am totally non-ideological on this. We will give the shares to the people who give us the most money and at the moment it looks as if the market is disposed to giving us more money than the ESM. One monopoly purchaser is in a stronger position than a number of willing buyers on the market but we will see. This is one of the reasons we have Goldman Sachs in. It will evaluate the full scenario and advance it.