Noel Rock (Dublin North West, Fine Gael)
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74. To ask the Minister for Finance the impact of the decline in value of the State's shares in a bank (details supplied) in 2016 ahead of the proposed sale of the State's shares in the bank. [10038/17]

Michael Noonan (Limerick City, Fine Gael)
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The ISIF issued their Q4 Quarterly Update on Friday 17th February. Included as part of that update was a provisional valuation of the State's investment in AIB at the end of 2016 which stood at €11.3bn, down from €12.25bn at year end 2015. This represents an estimated decline in value of just under 10% during the year and can be compared against a fall of around 8% across the wider European banking sector over the same period.

This desk top valuation was conducted on behalf of the ISIF and was based on the estimated financial position of the bank at year end 2016 and publicly available information.  AIB will report their annual results on Thursday 2nd March.

It is important to note that this is an "outside in" valuation produced for accounting purposes and was not informed by management's views of the prospects and risks for the business. This additional information would be disclosed in a published prospectus ahead of any proposed sale. Furthermore I would also highlight that in an IPO when one is selling a large volume of shares, the market usually applies what is known as an "IPO discount" and this is typically in the order of 5%-10% and occasionally more. Hence the price one gets on the day of flotation tends to be lower than what investors believe is the fundamental value of the business given the volume of shares being placed in one transaction and reflecting the fact that the State will also retain a significant stake in the bank which will be sold down over time. Taking these factors into consideration I do not believe that this valuation will have any material impact on our plans in relation to AIB this year.

As I have previously stated, any decision by the Government to proceed with a sale of our shares in AIB will be underpinned by the need to be satisfied that the market is prepared to put a fair and reasonable value on AIB, bearing in mind its current performance, its future prospects and the outlook for the economy. Officials in my Department continue to monitor market conditions and the performance of banking equities on an ongoing basis. While I cannot predict what market conditions will be like for bank shares over the coming year, it is our intention to be ready to execute a transaction if conditions allow.