Minister for Finance says AIB flotation unlikely this year

The Minister for Finance Michael Noonan has said he expects a planned flotation of AIB to be delayed until 2017.

Mr Noonan said in December he would float 25 per cent of the State-owned lender’s shares later this year if he were reappointed to the Department of Finance following the general election.

Speaking in Dublin yesterday, however, Mr Noonan signalled that market volatility meant it was doubtful the offering would proceed as originally envisaged.

“The market late last year and early this year for bank shares in particular hasn’t been good and so we’re considering our position,” he said.

“It is less likely that we’ll go in the last quarter of this year now and more likely we’ll go in the first half of next year if the market corrects, but it is all to do with market conditions and nothing to do with the programme for government.”

Commitment

Mr Noonan said the programme had a commitment that no more than 25 per cent of AIB would be sold between now and 2018.

However, there was never an intention to sell more than that initially anyway.

The Government needs to make a decision by the end of this month on whether to proceed with a flotation for AIB during 2016.

Mr Noonan said that even if global market conditions did not improve there were no plans to cancel an IPO.

“We would never abandon something like an IPO. It is Government policy to put the banks back into private ownership, but over a period of time when we can get maximum value for the taxpayer,” he said.

Under control

“We don’t need to cash out. There was a time we did to reduce debt levels and so on but we’ve all these things under control now so there’s no constraint on us. We’ll wait till we can get the maximum we can and won’t go above 25 per cent in the first tranche,” Mr Noonan added.

Bank stocks have been out of favour in recent months with Bank of Ireland losing more than €3 billion off its market capitalisation this year while Permanent TSB's share price is down about 46 per cent.

Although the Government programme promises "all necessary action" to tackle high variable mortgage rates, Mr Noonan said banks and credit rating agencies had nothing to fear. He said Permanent TSB, which yesterday warned of challenges due to rising regulatory costs, "is not ready for market yet".