State could make €700m from sale of BOI shares

State could make €700m from sale of BOI shares

Minister for Finance, Paschal Donohoe, says there is "no connection whatsoever" with the selling of these shares to the fact that Permanent TSB may need to raise funds to buy loans from Ulster Bank which is leaving the Irish market. Photo: Colin Keegan, Collins Dublin

Ireland is set to potentially earn €700m by selling its 13.9% shareholding in Bank of Ireland.

Finance Minister Paschal Donohoe made the announcement of the "phased exit" from the bank on Wednesday.

Starting in the next few days and ending in six months, a trading plan managed by Citi Group Global Market limited will see up to 15% of the expected aggregate total trading volume in the company sold.

"I've made this decision because I believe the prospects for the Irish economy and the ability of our economy to grow are very strong," Mr Donohoe said.

Due to the confidence that I have in our economy, making a strong rebound that leads to a period of growth, I also believe that the prospects of Irish companies, Irish employers and Irish investors are also very, very positive.

"I believe the value of our banking system will benefit from it. So this is the right point to indicate my intention to, over time, sell part of our share in Bank of Ireland."

The six-month plan is to ensure that the State does not disturb trading in the price of shares on any given day. The number of shares that will be sold each day is dependent on market conditions, amongst other factors.

In order to ensure that the taxpayer's interest is protected, shares will not be sold below a certain price per share, which the Department of Finance will keep under review.

The State has already recorded a cash surplus to date of €5.9 billion, against €4.7 billion originally invested in the bank during the financial crisis.

Mr Donohoe said the 15% figure is a "threshold that is consistent with being able to sell the right volume of shares throughout the duration of this plan but also maintain a stable market for the sale of Bank of Ireland shares".

"The Irish taxpayer put into this bank, it has been recouped and more, and we will make decisions in relation to all the other banks if the time is right, market conditions are right, and if it's consistent with us getting as much money back for the taxpayers as we can," Mr Donohoe said.

He says there is "no connection whatsoever" with the selling of these shares to the fact that Permanent TSB may need to raise funds to buy loans from Ulster Bank which is leaving the Irish market. 

"This decision, and any potential or future decisions are completely unrelated," he said. "I was always very clear, and have been for many years that over time I do want to find opportunities to unwind the shareholding that we have in our banks," he added.

"It would be credible to acknowledge it is relevant to the value potential buyers have placed on the shares of our banks now, because it has affected the competitive dynamic within the Irish banking sector, and that is a factor in the decisions that future investors make.

"My preference is actually that the shares are bought by a variety of owners, because I think that is the best thing for the stability of shares in these funds in the future."

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