Minister for Finance Paschal Donohoe said that he expects “to be able to announce shortly” that the State’s stake in Bank of Ireland has been reduced to zero. “This will be an important milestone in delivering on the Government’s policy of returning the banks to private ownership,” Mr Donohoe said in an address to the Oireachtas finance committee on Wednesday.
The Government reduced its Bank of Ireland stake in less than 12 months to early June from 13.9 per cent to below 3 per cent. That is a key threshold below which it is no longer obliged to disclose its position to the stock market.
The State is known to have continued to sell shares on the market since then.
Bank of Ireland’s then chief executive Francesca McDonagh said early last month, as the lender reported interim results, that the State’s holding would “fall to zero” within months.
The bank, which received a €4.7 billion bailout during the financial crisis, had returned €6.5 billion to the State via various payments by June.
The State has also reduced its AIB stake to 63.5 per cent from 71 per cent so far this year, including through a placing of a 5 per cent block of stock in June. The Minister said that he plans to start drip-feeding more AIB shares into the market from later this month – when a 90-day lock-up period following the June placing runs out – and that his officials would “continue to monitor markets for future opportunities to sell more of our shareholding to larger transactions”.
AIB has so far only repaid €11.1 billon of its €20.8 billion crisis-era rescue.
Budget 2022: What to expect
In part one of today's podcast, Jack Horgan-Jones and Cliff Taylor discuss next week's budget when the government is expected to deliver a huge package of relief for households as well as the usual adjustments to taxes and new fiscal initiatives. In part two: Once again, the tourism sector will be hoping for an extension to the 9% VAT rate that was brought in to help businesses survive the pandemic. But there are indications the rate, which was extended by six months earlier this year, will not be extended again. Eoghan O'Mara Walsh is Chief Executive of the Irish Tourism Industry Confederation and he tells Ciaran why the rate should stay and how the sector is faring.
Meanwhile, Permanent TSB’s (PTSB) plan to buy €6.8 billion of loans from Ulster Bank will involve the exiting bank’s UK parent receiving a 16.7 per cent holding in PTSB as part payment. While this will dilute the Irish State’s stake in PTSB to 62.5 per cent from 75 per cent currently, Mr Donohoe highlighted that the smaller percentage interest “will be in a much larger and more attractive bank”.
Separately, the Minister faced a sustained line of questioning from Sinn Féin TD Pearse Doherty on AIB’s short-lived decision in July to turn 70 branches into cashless outlets. The bank reversed its plan within days following widespread customer and political uproar.
The Department of Finance was informed in June of the branches proposal in documents it received ahead of a board meeting that decided on the matter. Mr Donohoe said he was briefed on the issue on the morning of July 19th, the day the cashless branches move was announced.
The Minister insisted that he was prohibited by his formal relationship agreement with AIB from getting involved in commercial decisions. He also suggested that any perception that he could do so would be dangerous as it could affect the ability of banks to secure investment and fund the economy.
“We’ve already had two banks leave our country,” he said, referring to the imminent departures of Ulster Bank and KBC Bank Ireland. “We’ve three banks that we’re hoping will be sustainable and meet the needs of our economy in the years to come.”
Still, the Minister said that he asked his officials to make contact with AIB before the cashless plan was abandoned to “make sure” the bank was aware of the public reaction to the matter.
