European Central Bank president Mario Draghi has signalled his support for the Government's plan to return AIB to the main stock markets in Dublin and London after 6½ years of almost 100 per cent State ownership.
Responding to a question from Irish MEP Brian Hayes at a European Parliament economic and monetary affairs committee hearing on Monday, Mr Draghi said the timing of an AIB share sale was entirely up to the Government.
“It’s quite desirable to transfer the risk of equity holdings in banks from the taxpayers to the private sector,” he said.
Mr Draghi added that the repair of Irish banks’ balance sheets following the financial crisis had “advanced significantly” and that “great progress is there”.
The comments come as Minister for Finance Michael Noonan is expected to press the start button as early as Wednesday on plans to sell an initial 25 per cent stake in AIB, which could raise as much as €3 billion.
AIB fell under 99.8 per cent State control in December 2010 as part of a taxpayers’ bailout of €20.8 billion to the lender during the financial crisis to save it from collapse as it struggled with soaring bad loans.
Dividend
The Government has since recovered about €3.3 billion of its rescue bill as AIB redeemed preference shares and contingent convertible notes issued to the Minister for Finance between 2009 and 2011. In addition, it received a €280 million dividend from the bank this year based on its 2016 full-year results.
“President Draghi’s comments should be welcomed as they are very much in line with the Government’s strategy to shortly begin the process of returning AIB to the private sector,” Mr Hayes said. “It’s not in Ireland’s long-term interest to have large State holdings in the banking sector. It doesn’t help competition in the sector. It discourages new entrants from coming into the banking market.”
The Government continues to own 75 per cent of Permanent TSB and almost 14 per cent of Bank of Ireland.
Also on Monday, Labour party leader Brendan Howlin called on the Government to postpone the sale of its AIB stake until European rules can be amended so the proceeds of the flotation can be used for capital investment.
In an interview with Newstalk, Mr Howlin said it was "in the best interests of the Irish people" that the money is used to invest in roads, sewerage, houses and transport.
Arguing that the Government did not have any mandate to proceed, Mr Howlin said that if it did, it would be “fundamentally wrong and undemocratic”.
“The Government has no mandate because the Dáil has voted not to do this,” he said.
