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Updated 2.10pm
THE FINANCE MINISTER revealed this morning that the government has hired Goldman Sachs to advise it on how to “optimise the return on AIB, where more than €20 billion of taxpayers’ money has been invested”.
The investment banking firm is providing the advice on a pro-bono basis.
In an opinion piece in today’s Irish Times, Michael Noonan says his strategy to recoup taxpayers’ money – €64.1 billion to be exact – used to bail out Ireland’s banks is working.
Of that sum, €34.7 billion was poured into Anglo Irish Bank and Irish Nationwide Building Society, both now defunct.
The remainder – €29.4 billion – was shared between AIB, Bank of Ireland and Permanent TSB.
As of the last day of 2014, the State’s stake in AIB was valued at €11.7 billion and the 14% equity interest in Bank of Ireland was valued at €1.4 billion, according to Noonan. A number of contingent convertible capital notes (CoCos) in AIB and Permanent TSB bring the current value of the investment to just over €15 billion.
Noonan admitted that Permanent TSB is not as “far along the road to recovery” as AIB and Bank of Ireland but insisted it has a “viable” plan.
His department, however, will focus on AIB this year.
“Given the scale of the State’s investment – some €20.8 billion – and the range of options available to recoup value from the bank, officials within my department are working with AIB to reconfigure the capital structure,” he writes.
Goldman Sachs International has been appointed to provide financial advice.
“While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer.”
The Minister, who took the opportunity to remind readers that the bailout was the result of a Fianna Fáil decision, was tight-lipped on specifics in relation to AIB but said that “all options remain on the table”.
Concluding, he said: “I am confident that, over time, we will at a minimum fully recover the funds this government invested in AIB, Bank of Ireland and Permanent TSB. If economic and trading conditions continue to improve over the next decade or so, the cash returned to the State combined with the value of any remaining shareholding may exceed the funds invested.”
Speaking on Morning Ireland, junior minister Simon Harris said the government expects to recoup “every single cent”, noting that it is a significant announcement.
He said he was “eager to point” out that the opinion piece was not written because of an impending election, noting that Fine Gael predicts Ireland will go to the polls in 15 or 16 months time.
Asked about the Anglo and Irish Nationwide investment, Harris passed the buck back to the previous government, telling the presenter that his government had not put any money in to the failed institutions.
On the appointment of Goldman Sachs, Harris said it would be “very hard” to find a firm that didn’t have problems during the financial crisis.
On payment, he said: “My understanding from commentary is that this may be something they are providing pro-bono but I am not in a position to confirm that.”
Following questions from the media, the Finance Department issued a statement outlining how Goldman Sachs won a mini-tendering process.
“This appointment follows a competition in December involving all of the Lot 1 members of the Department’s financial advisory panel which was established in October following a public procurement process.”
“All members of Lot 1 were invited to tender and submit a written presentation covering their credentials, team members for the assignment and various questions relevant to AIB along with a fee proposal,” the statement continued.
“All applicants were then invited to present to SMU and respond to questions on their proposal. At the end of the process, Goldman scored the highest marks and was therefore appointed following negotiation of their engagement letter.”
It is understood that all firms which tendered for the job said they would complete the tasks on a pro-bono basis.
The advice given is the first step in a two-step process. There will be a separate tender if there is a decision made to sell the stake in AIB.
First published 7.30am
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Convenient they can blame the EU now
@Pj Browne: god forbid we follow laws and agreements.
I wouldn’t mind but it’s literally the government’s job to know how to pass laws and give enough notice to those affected. They’re getting away with doing it to renters, but it sounds like the people who have managed to afford a spare room are able to stand up for their agreed legal right to fair notice.
@Fiona Fitzgerald: sorry what do you mean they are getting away with it on renters ? If you mean not extending the temporary winter eviction ban I think you have that all messed up
Slightly confused about this article? What exactly is the delay? There has to be a reason for this but the article implies that it’s the EU who is for some unknown reason delaying the process. Clearer journalism would help
@Dave Phelan: It says they want to “engage with stakeholders”, which to me means they want to present the data from their analysis and need those at the top to prioritise it over other issues based on that data. The real question to me is why wasn’t this analysis done in the beginning when it was first proposed?
If you have bought a house, paid vat, paye, stamp duty etc, then the government should not be able to prevent you doing something lawful with it. Deflecting blame from their own failures
@Dave Harris: in fairness nobody is allowed do what they like once they buy something. It does seem unfair that somebody could suddenly find themselves living next door to an ever rotate number of strangers on holidays who often don’t respect locals. Think there is a place for short lets but it can’t go on as is.
@Dave Harris: lol lawful? The state decides what’s lawful. In this case lawful is changing it so that you have to have planning permission before turning your property in a domestic structure into a business. All the other people in the area/building bought based on it being a residence not being a hotel. And every other lawful accommodation business needs to register with bord fáilte and have the required standards and checks in place so why should these get away with it?
@Dave Harris: Laws change and rightly so as society evolves. Airbnb has had a huge impact on housing crises across Ireland and internationally. The government has failed on a number of fronts in relation to housing and regulating short-term rents is one thing they need to act on. We have tourists in home while homeless and refugees are in hotels.
@Emma Meehan: never sure on this “huge” impact in Ireland. Never saw any figures.
12,000 rental units – what a load of cobblers. As a former Airbnb host, I know that most rural hosts have a couple of rooms in their own house or a granny flat and they are definitely not viable accommodation long term. It’s probably different in the cities. But now the rules mean getting planning permission, registration fees, etc. So it’s an end to the farming community or elderly people getting the chance of a few quid in summer time and bringing much needed tourism to the regions. When something is not broken, why try to fix it? As the hosts I’ve been listening to are just getting out. Same as with small landlords, there’s too much hassle, beaurocracy and expense.
@Shelley Keary: As someone who uses Airbnb regularly for accommodation in rural parts of Ireland, I’d definitely agree that most places even those at the higher end in terms of standards are definitely not suitable for long-term renters. They are often in beautiful parts of the country and ideal for some quiet time away but located in very isolated areas, with limited access to services such as schools, medical centres etc, and only having a one shop village nearby that requires driving to. Flaky internet so not suitable for remote work etc, prone to dampness in winter, no childcare available & absolutely no transport options. A blanket approach to classifying all Airbnbs in the same way is ludicrous. The reality of available, suitable, properties is much less then the projections given.
@Shelley Keary: and taxes
Ireland, behind the curve as usual. https://www.nyc.gov/assets/buildings/pdf/MultipleDwellingLaw.pdf
@zephyrum: what has US laws got to do with Irish and EU laws?
The change of use planning rules which have not been announced for Short Term Rentals by the Housing Minister but form part of the proposed Tourism Register is the reason thousands of self catering tourist accommodation providers voiced their concerns to the EU via the TRIS submission process. Rural and coastal tourist accommodation is being put in the same boiling pot as urban short term let’s who are capitalising on higher rental rates and should be the target of the government but all offering these services will be put into the same net. This will have a significant impact on rural businesses that provide benefit to all local businesses whether food and bev, tourist attractions, etc. These rural businesses are already reeling from reduced numbers if accommodation in Summer 2022 due to 35 percent of accommodation contracted to the government for refugees.
Not sure why a Tourism Register is being linked to housing policy that hasn’t been announced? TRIS requires that such policies should be transparent. There was no indication either on what the registration annual cost would be, so I’m wondering why the Govt is surprised that this proposed legislation is at a standstill till Dec 23. Maybe Housing Dept should be looking at their shortcomings rather than trying to pin the homelessness problem on anyone and everyone but themselves.
have your say