Noonan accused of surrender on bail-out

Minister for Finance Michael Noonan has been accused of “surrendering” any hope of a bank bail-out debt deal from the EU.

Opposition parties said plans to sell-off State-owned AIB amounted to a huge climb-down by the Government in its long-running battle to get compensation from Brussels for moving to protect the European banking system.

After insisting they had received a “game changing” promise of a retro-recapitalisation deal with the EU in 2012, ministers have now moved to engage Goldman Sachs to advise on an AIB sell-off, which Sinn Féin and Fianna Fáil claim marks a Government U-turn.

Financial experts Goldman Sachs, who advised the now-defunct Irish Nationwide on its strategic options in the run-up to the 2008 bank guarantee before it was taken into public ownership and bailed-out at a cost of €5.4bn, will work for free.

The sale of AIB is likely to be put off for some time as the National Treasury Management Agency calculated that the State’s €20.8bn investment was now worth just over €13bn.

Sinn Féin finance spokesperson Pearse Doherty said Mr Noonan’s statement amounted to a letter of surrender. “It is an attempt to turn a clear defeat into some sort of victory. In effect it is a surrender letter. In June 2012 we were told there had been a seismic shift and Ireland was in line for special treatment.

“Now that lie has been exposed. Ireland will get no break from the EU. The Government has surrendered on the issue of the EU, through the ESM paying the Irish people back,” he said.

Fianna Fáil’s finance spokesperson Michael McGrath warned the Government had now thrown in the towel on an EU bank debt deal.

“This is a dramatic U-turn on the part of the Government. Fianna Fáil is not adverse to the State divesting itself of at least some of its shareholding in AIB at an appropriate time, but there should be no question of selling any of our shareholding in the bank pending the outcome of the negotiation of a bank debt deal.

“Selling equity share capital in AIB now would be a complicating factor in that arrangement.

“The minister previously indicated an application to the European Stability Mechanism was being prepared for retrospective bank recapitalisation. It is entirely premature to speak about selling part of our shareholding in AIB until there is full clarity on the outcome of this process.

“The idea that Goldman Sachs would not charge for its services is entirely implausible. If they are not charging an upfront fee, it is because they perceive an opportunity for much greater payments down the line, possibly from underwriting a sale of the State’s shareholding,” Mr McGrath said.

Mr Noonan said he expected to recoup the €20.8bn pumped into AIB by the Government via the sale.

“Given the significant size of our AIB investments and the range of options available to us to recoup value, my officials and their financial adviser are focused on ensuring the optimum decisions are made regarding potential capital restructuring options and sequencing in order to maximise the ultimate return from these investments to the State over time,” the minister said.