Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

21. To ask the Minister for Finance further to his views regarding the future of AIB the reason he is quoted as saying the bank will return to private ownership over a number of years through a public selling of the shares in view of his commitment to apply for the retrospective recapitalisation of the pillar banks. [45942/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

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 was carried out by the NPRFC at the end of 2013, and this valued the State's ordinary and preference shareholding at €10 billion. Including the Contingent Capital Notes we hold or coco's, 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 therefore be confident that the current value of AIB is greater than the NPRF valuation at end 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 we begin the process of repaying the taxpayers large investment.

With respect to the State's shareholdings or ownership in the banks, Government policy remains unchanged 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 around reducing our ownership in the bank now, because as I've just outlined, we have important decisions to make around how we should best reconfigure our existing investments in a way that benefits both the bank and the taxpayer. That's 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 the point where we can consider selling some of our shares.

In relation to retrospective recapitalisation via the ESM, I would reiterate what I've said previously, that it serves our interest to keep this on the table. However I see no benefit in making an application to the ESM now. I believe the work we plan to do with AIB in the coming months will help us better understand what our investments are really worth, and ultimately which route - ESM or the markets - will be our best option.