TDs call for ‘transparency’ over fees to AIB advisers

Opposition politicians have called for full “transparency” over the fees Government and AIB will spend on advisers as Finance Minister Michael Noonon confirmed plans to sell 25% of the bank.

Analysts said the sale, which should be completed in the next four weeks, could raise over €3bn after a rise in stock market valuations.

The calls come as the Organisation for Economic Cooperation and Development (OECD) said the fees charged by investment banks in underwriting companies for raising fresh capital are “akin to tacit collusion” and merit review by competition authorities. It said underwriting fees were by far the largest direct cost for any initial public offering (IPO).

The OECD also said it saw signs of parallel pricing when there is little divergence in prices between supposed competing companies.

“High levels of fees and parallel pricing (akin to tacit collusion) appear to have increased,” the OECD said.

It quoted data showing the median underwriting fee for IPOs in the US is 7% of total proceeds from the IPO and has risen to 8% in Japan and China. At the same time, European issuers have consistently paid less — around only 3%.

Labour Party leader Brendan Howlin said: “Unfortunately, the decision to go ahead with the IPO of AIB has been cloaked in secrecy and today’s OECD report only adds to my concerns.”

“In response to parliamentary questions, the Minister for Finance has confirmed that fees to financial advisers were on a percentage of the value of the transaction, but refused to disclose what that percentage was.”

Pearse Doherty, Sinn Féin finance spokesman, said “clear transparency” was needed in the sale of such a valuable State asset.

Additional reporting: Reuters