Sir, – Congratulations to John McManus (Business Opinion, August 1st) on his article on selling a large portion of the Bank of Ireland to private investors. “The decision to sell it [34.9 per cent of Bank of Ireland] to them for €1.1 billion with no strings attached seems to verge on the foolish,” he writes.
The State has poured €3.5 billion into the bank. The State guarantees its deposits. Through Nama, the State has purchased its toxic loans at well above their current market value. State funds underwrite the continued provision of liquidity to the bank from the Central Bank and from the ECB. Yet for a fraction of the financial input of the State, the investors are given over a third of the bank, which is very close to the share of the bank which continues in State ownership. The Government “spin” is to the effect that the taxpayer is being “saved” €1.1 billion the State would otherwise be required to provide by way of recapitalisation. Net financial assets of Irish households increased by €27 billion in 2009 and are expected to have risen by the same amount in 2010. A modest assets tax on the super-rich would have collected the required €1.1 billion.
Most importantly, the State is committed to maintaining Bank of Ireland as a “pillar” bank. The clear intention is that the bank will operate on a profitable basis. But now for €1.1 billion the private investors will reap the same share of future profits as taxpayers who have invested several times that figure.
The taxpayer has been ripped off. – Yours, etc,