Former minister of state at the Department of Finance, Brian Hayes, has urged the Government to quicken the sale of Allied Irish Banks.
He said that failure to do so would delay the broadening of competition in Irish banking.
The new Programme for Government says that no more than 25% of the State’s near-total holding in AIB will be sold before 2019.
An initial share sale, depending on market conditions and the appetite for banking shares, is expected to start next year.
However, speaking at a Fine Gael meeting last night, Mr Hayes — currently an MEP for Dublin — said that targets should be widened and that the Government should commit to selling 50% of AIB by 2019.
“The country paid far too high a price for saving the banks...What’s important, now, is to recover as much as possible of the investment, and the future sale of AIB is critical in this regard. The total State investment in AIB was €21bn and, by July, close to €6.5bn will have been recovered from AIB,” he said.
He added: “The new government should sell AIB as soon as it is practical.
“In my view, it’s not in Ireland’s long-term interest to have large State holdings in the banking sector.
“It doesn’t help competition in the sector. It discourages new entrants from coming into the banking market, offering new products and competing with the pillar banks for business.
“If ever we need new entrants, it’s now. The Government should make a firm commitment that the State’s holding in AIB should be no more than 50% by the start of 2019.
“It is important for the Government to get out of the banking business, because it often leaves the Government entangled in the sometimes competing interests of corporate profit and customer protection.”
He said that while Finance Minister Michael Noonan was correct to postpone a decision to sell AIB shares in a depressed market, the key requirement was to sell as the market rose.
“AIB should not be sold, until there is clear evidence that there is strong competition in two critical markets — mortgages and lending to businesses, particularly the SME sector,” Mr Hayes said.
“Minister Noonan has many issues to take into account, in coming to a conclusion on the disposal of AIB.
“The international financial system remains volatile; timing the sale of bank shares will take judgement and a measure of luck.”
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