ESRI: State should delay selling banks

Selling the pillar banks when they return to profitability and the economy has stabilised will be one of the most effective ways open to the Government to make a significant reduction to the national debt in the future, said research professor with the ESRI, John FitzGerald.

Moreover, the Government should avoid measures like large-scale debt forgiveness and the firesale of assets that would weigh on the banks’ profitability, he added. If by 2020 the economy is back to health and the banks are functioning properly and profitable, then the Government could generate up to 20% of GDP through the divestment of its stakes in the pillar banks.

However, there was the risk that because the banks were in state control and subject to political pressures, decisions could be made that would undermine their profitability, he said.