Good time to sell State stake, says AIB chief

Paradise Papers show bank declined to give the Revenue Commissioners access to data

AIB have declined to comment on claims in the Paradise Papers that they marketed products to help wealthy customers avoid tax. Video: Enda O'Dowd

 

Now would be a good time for the Government to sell its interest in AIB should it wish to do so, the chief executive of the bank has said.

Bernard Byrne told the Oireachtas Finance Committee that investors like Ireland at the moment and the bank’s stock is performing well.

“These things come and go,” he said. “There is an opportunity there that looks attractive.”

Mr Byrne was asked if he thought it was “acceptable” that the bank’s huge losses during the financial crisis mean that it had almost €3 billion in tax credits that can be used against profits over the coming years.

Responding to Labour TD Joan Burton, Mr Byrne said the issue was whether the State wanted to get its return out of AIB “earlier rather than later”.

The State raised €3.4 billion by selling a 28.8 per cent stake in AIB over the summer at €4.40 a share. The stock was trading at €5.51 on Thursday evening.

Mr Byrne said the deferred tax provision was an asset that forms part of the value of the bank, which as of today has a market capital of €14.9 billion.

The State has a 71 per cent stake in AIB arising from bailing out the bank during the crisis and so the bank’s added value arising from the large tax credit will benefit the State in the event of its selling its shareholding.

Paradise Papers

Mr Byrne appeared before the Committee on Finance, Public Expenditure and Reform to answer questions in relation to the Paradise Papers, which included documents to do with its former subsidiaries in the Isle of Man and Jersey.

In response to Pearse Doherty of Sinn Féin, Mr Byrne said a report in The Irish Times arising from the Paradise Papers was wrong when it reported that AIB declined to give the Revenue Commissioners access to data on its offshore customers when responding to a court order in 2015.

There was no court order in 2015, he said, and AIB plc had complied with all the court orders issued against it, he added.

Paul Murphy of Solidarity read out a letter dated September 2015 to Andrew Smith, head of AIB Group Legal Services, from AIB in the Isle of Man in relation to whether that branch would consent to AIB plc’s request to review customer data “held on AIB’s data server for documents relevant to the disclosure orders made by the Irish High Court and, if relevant, disclosing them to the Revenue Commissioners.

“It is not possible for AIB [Isle of Man] to consent,” the letter read.

Revenue settlement

The letter came from the leaked Paradise Papers. Mr Byrne rejected the suggestion that he was trying to mislead the committee. He said there were no High Court orders granted to the Revenue against AIB in 2015. The 14 High Court orders granted against AIB to the Revenue were in the eight years up to 2012. The letter to AIB in the Isle of Man arose in a different context.

Mr Murphy said that in his opinion, Mr Byrne had been trying to mislead the committee.

Mr Byrne said that as part of its dealings with the Revenue in relation to its offshore inquiry launched in 2004, the bank had made a €10.8 million settlement to do with matters arising from 1998. This was in part because of incomplete records being held by the bank.

He told the committee that the bank first established an offshore presence in the Isle of Man and Jersey in 1977 and 1981 respectively “to support the bank’s growing business franchise in Britain and the US and to meet the banking needs of the increasing international workforce.”

AIB’s decision in 2012 to close the offshore banks was a “heavily commercial” one, he said, when asked by Ms Burton if it had been in part influenced by the fact that the group had been bailed out by the State. The offshore bank continues to hold records relating to its former customers.