Bank bail-out estimated to have cost State €41.7bn, says comptroller

Report adds up to estimated €1.3bn a year to the cost of servicing national debt

The new figures take account of the State’s initial investment, the sale of shares, the dividends and interest from the banks and the complex cost of bailing out Anglo Irish Bank and Irish Nationwide. File photograph: Bryan O’Brien

The new figures take account of the State’s initial investment, the sale of shares, the dividends and interest from the banks and the complex cost of bailing out Anglo Irish Bank and Irish Nationwide. File photograph: Bryan O’Brien

 

The bail-out of Ireland’s banks during the financial crisis is now estimated to have cost the State €41.7 billion, according to the latest estimate from the Comptroller & Auditor General (C&AG).

It also adds an estimated €1.1 billion to €1.3 billion a year to the cost of servicing the national debt.

The new figures, contained in the C&AG’s annual report, take account of the State’s initial investment, the sale of shares, the dividends and interest from the banks and the complex cost of bailing out Anglo Irish Bank and Irish Nationwide. The €41.7 billion figure is close to previous estimates made by the C&AG in 2014 and 2016.

The report says that the €41.7 billion figure does not take account of the interest costs which will arise from funding the annual cost of servicing the additional debt in the years ahead. At an average cost of debt of 2.5 per cent, this would work out at €1.1 billion per annum.

Largest costs

The C&AG’s figures include the value of the State’s remaining shareholding in AIB, Bank of Ireland and Permanent TSB – a combined €8.4 billion last year – and NAMA’s retained earnings of €4.2 billion.

By far the largest portion of the cost relates to Anglo-Irish Bank and Irish Nationwide – merged into the IBRC– and estimated to have cost the State a total of €36.4 billion.

Meanwhile the report says that the State is unlikely to generate a surplus on its €22.2 billion investment in AIB. At the end of 2018 this has cost the state and estimated €9.5 billion, after taking account of the value of the remaining shareholding in the banks.

Estimates that the State might recoup its investment in AIB “ do not appear to take account of the estimated cost of servicing the debt associated with the investment,” the report said.