Taxpayers’ stake in banks falls over €10bn
Finance Minister Paschal Donohoe's refusal to sell more shares in three bailed-out banks has seen the taxpayer's stake fall by more than €10 billion in less than two years, it can be revealed.
The public holdings in AIB, Bank of Ireland and PTSB have “collapsed” and as a result Mr Donohoe has been forced to pull back from any move to re-privatise the banks nationalised a decade ago, saying such plans are “on hold”.
The Covid-19 crisis has seen up to €3 billion wiped from the value of the shares since the start of the year.
Shares in AIB have fallen from €2.45 on February 17 to €0.945 at close of business on Friday.
Bank of Ireland shares fell from €4.22 to €1.43 during the same period and Permanent TSB fell from €0.95 to €0.45.
The taxpayer owns a 71% shareholding in AIB, which was valued at about €2.1 billion last week.
According to Fianna Fáil's finance spokesman Michael McGrath, publicly-owned shares in AIB have fallen in value by €8.4bn since January 2018. If you add in the fall in the BOI and PTSB shares, you are around €10bn. “It is an extraordinary amount,” he told the Irish Examiner.
“There was certainly an opportunity to sell a further stake in AIB at a dramatically higher share price, especially when the former CEO Bernard Byrne suggested it in late 2017, but that opportunity is now long past and is unlikely to present itself again anytime soon,” the Cork South-Central TD said.
The value of the State’s share in the banks has collapsed in recent times, and there would no logic in going to market to sell bank shares any time soon. The priority for now is to ensure the banking system supports the economy at this enormously challenging time for many individuals and businesses.
"Maximising the return from the State’s investment in the banks is for another day, when we are in much calmer economic waters. For now, we need every part of government and the financial system to bring a laser-type focus to supporting the recovery of the economy,” he added.
Commenting on the drop in values, Mr Donohoe told Mr McGrath that recovering all of the €29bn that the state invested in the three remaining banks “is not realistic in the short term and perhaps not the medium term either.”
“With bank share prices having dropped dramatically all around Europe, our investments are worth a fraction of what they were worth only 12 to 18 months ago and any plans to sell more of the State's shares in the banks are now on hold,” he has said.
Mr Donohoe said it should also be noted that Irish bank share prices have been under-performing for at least 18 months i.e. before the onset of the current Covid-19 health and economic crisis.
He said the three banks in which the state has a shareholding (AIB, Bank of Ireland and PTSB) entered this crisis in a good position with strong capital and liquidity positions – a stark contrast to the previous recession.
There are now significant capital and liquidity buffers in place in Irish banks which puts them in a strong position to continue to lend to the economy and to aid the recovery, he said.
