Terence Flanagan (Dublin North East, Independent)
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78. To ask the Minister for Finance his plans for selling Government holdings in Allied Irish Banks, Bank of Ireland and PermanentTSB; and if he will make a statement on the matter. [3214/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware the Irish banking system is now in a much stronger position than it has been in recent years. Profitability is improving, 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 2009-2011 period. 

As I have previously stated it is not the State's intention to remain a holder of the banking investments in the long term. Given the high debt to GDP ratio income from the sale of these investments over time should be used to reduce the State's debt burden.

With regards to AIB, much of the banking-related work in the Department of Finance this year will focus on that bank. 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 have appointed Goldman Sachs International to assist us with moving the bank to the next phase of its development.

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.

Following the successful sales in 2013 of the BOI CoCos and Preference Shares investments, the State's remaining investment in the bank is its almost 14% equity stake. With the current share price at 30 cent, the value of this equity stake today is c. €1.4 billion. Any decision to sell this stake will be influenced by valuation and the need to manage the trajectory of the State's debt to GDP ratio. Officials in my Department monitor market conditions and valuation on an ongoing basis.

In the case of Permanent TSB, the Comprehensive Assessment Adverse Stress Test result identified a shortfall of €855 million. As a consequence the bank has submitted a Capital Plan to the ECB, which outlines how the bank intends to meet the capital shortfall.  Much of the shortfall has been met through performance in 2014 and deleverage of loans. The remaining shortfall will require the bank to raise capital, including equity capital, from private sources in 2015, diluting the State's shareholding.  Details of the capital raise have not yet been finalised.  While there are no current plans to sell shares held by the State during the process I will keep this under review as it may be required to ensure a successful capital raise process for the State and other shareholders.  

I am of the view that the best way to protect the value of the State's shareholding is to ensure Permanent TSB is well prepared, that it conducts a comprehensive and competitive exercise to raise the capital with appropriate legal and financial advice, and that the State has meaningful oversight and involvement in the process. Officials from my Shareholding Management Unit and our financial advisers, JP Morgan Cazenove, are well placed to fulfil this role.