Time is right to cash in some of State’s AIB shareholding

State can get a good price now for 25 per cent stake it plans to sell

Labour leader Brendan Howlin and Labour TD Alan Kelly at Leinster House during a media briefing on the Government’s plan to sell part of its stake in AIB. Photograph: Gareth Chaney/Collins

Labour leader Brendan Howlin and Labour TD Alan Kelly at Leinster House during a media briefing on the Government’s plan to sell part of its stake in AIB. Photograph: Gareth Chaney/Collins

 

The Government should be rightly embarrassed at the mess which led to a Dáil motion from Labour, calling for the postponement of the AIB flotation, being passed. Fine Gael, amazingly, appeared so caught up with its own leadership contest that its TDs didn’t turn up to vote. There is a strong case to float AIB and to do it now, when markets are good, but by allowing this to happen the Government has allowed opponents of the sale a real PR opportunity. And they are quite entitled to use it.

There is a case to be made against selling , even if the balance of advantage remains to push ahead. The core point of the opponents is that the cash proceeds – say €3 billion – will make only a small dent in the national debt of some €200 billion. But their counter-argument is less persuasive. The opponents of selling now – with Labour and the trade union movement in the forefront – argue that the money should be used not for debt repayment, but rather for infrastructure spending and other investment.

Euro-zone rules – which restrict the amount states can spend – are, indeed, too tightly drawn in relation to investment spending. But a once-off sum of €3 billion is not going to transform the public budget, either, or allow a host of other problems to be magically solved in short order. The required boost in investment spending requires not only easier European Union rules but also a long-term funding plan, likely to involve borrowing from the European Investment Bank and other sources and with implications for tax and spending plans elsewhere.

The most persuasive argument, however, is that the State can get a good price now for the 25 per cent it plans to sell. And paying down a bit of our national debt – one of the key exposures the State still faces – is far from a waste, as it will cut risk and free resources in the long term for other uses. Also, the State retains 75 per cent of the bank, so more cash should land in the exchequer’s bank account in future years as more shares are sold.

Ireland faces significant economic risks over the next few years. And AIB is a play on the Irish economy. Best to cash in some of our chips now.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.