With the sale of shares in AIB by the State edging ever closer, attention now turns to what the bank might be worth.
We won't know that probably until May or June, but the Minister for Finance Michael Noonan and Anti Austerity Alliance TD Paul Murphy had an entertaining exchange about the value of the bank on Tuesday.
Murphy suggested that the €20.8 billion paid by taxpayers to bail out AIB in what he described as a “fire sale” post the 2008 crash represented a “rip off of the public”.
Noonan had a rather different take on the matter. “First, the Deputy uses such terms as ‘give away’ and ‘fire sale’ very loosely. Like any asset, whether it is a bank, a house or a bicycle, it is only worth what a willing buyer is willing to give to a willing seller on any given day.
“When AIB was taken over by the State it was taken over because there were no willing purchasers. One would not have got €100 for it. It does not make sense to say AIB was worth €20 billion and now it is worth less. The point is that it was worth nothing when the State took it over.”
Murphy persisted, adding that we had taken it over for €20 billion, but Noonan didn’t agree.
“No, we put a lot of money into it to recapitalise it,” the Minister said. “That was not the purchase price. That was the capital necessary to keep it going as a bank, and that is what it cost the State in terms of capital injection, but it was not the market value.
“Nobody was going to give €20 billion for it. The problem was that nobody would give €20 for it at the time.
“Will we debate it? I will keep the Dáil informed. No decision has yet been made as to whether or not we are going for an IPO [initial public offering], but I will keep members informed every step of the way, and we will see where the discussion leads.”
