AIB shares - Relationship needs to be rebalanced

THOUGH little more than a closing footnote in a long career — he joined the Dáil in 1981— Finance Minister Michael Noonan will take some satisfaction in the fact that, on his last day as a minister, his warnings that AIB shares were overvalued have been vindicated.

At one stage yesterday the shares fell by more than 28% as punters considered the price range the State proposes to sell stock at in the coming weeks. Shares spiked last month at €9.20 but Mr Noonan has said the State will sell up to 28.8% of the bank at between €3.90 and €4.90 a share. Not exactly Eircom but hardly Facebook either.

The price will define how much of the €64bn — €20.8bn for AIB — we coughed up to rescue banks in 2008 might be recovered. Optimistic estimates suggest half of that, confirming that the banks are always on the winning side of these transactions. The price will be decided by the unquestionable force of our time — the market — but there are several things about this sale that will not be decided by the market.