Michael McGrath (Cork South Central, Fianna Fail)
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154. To ask the Minister for Finance his plans to return Allied Irish Bank to the private sector; the issues that need to be addressed in the Irish banking sector generally before this happens; and if he will make a statement on the matter. [1891/16]

Michael Noonan (Limerick City, Fine Gael)
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I have made it clear that the decision to sell any part of our shareholding in AIB will be one for the next Government.

The State's stake in AIB is a valuable asset. As the deputy will know, in December of 2015, AIB successfully completed the reorganisation of the bank's capital, including the return of almost €1.7 billion to the exchequer from the redemption of Preference Shares. This was possible because the bank have made significant progress on a number of fronts, such as returning to profitability, reducing non-performing loans and increasing lending into the Irish economy. In this context, I think it prudent to explore the options available to us, with a view to ultimately recouping the significant investments that the State made in AIB during the financial crisis.

There is still work to be done in assessing how we might structure our gradual exit from the bank and particularly when we should start this process. My Department have recently appointed an Independent Financial Advisor, Rothschild, to provide advice in this regard. The appointment will help provide the next government with all the information and optionality they need to make an informed decision about our investment.

The Irish banking sector has made substantial progress in improving profitability, reducing impaired loans, and increasing lending particularly to SMEs. Where legacy issues remain in the sector - such as the elevated, though declining, number of mortgages in arrears - it is the remit of the Central Bank to monitor these and intervene where required. All progress toward a more stable and active banking sector will have positive implications for the value of the State's shareholdings in the banks.