Calls for sale of AIB shares to be delayed

Michael Noonan says his hands are tied

Calls for sale of AIB shares to be delayed

Allied Irish Bank chairman Richard Pym speaking at the AIB annual general meeting in Dublin | Image:

The Finance Minister Michael Noonan says his hands are tied when it comes to re-investing the money raised from the sale of the AIB shares owned by the Government.

The Dáil has been debating a Labour Party motion calling on the Government postpone the sale.

It wants Mr Noonan to wait for a change to European Union spending rules, and then invest the money in projects like schools and hospitals.

Minister Noonan told the Dáil the rules mean the proceeds of the AIB sale must be used to pay off the national debt.

But Labour leader Brendan Howlin thinks it is the wrong approach.

"The social good we could deliver if we invested that money in public infrastructure would be worth much more, it would be much more significant than reducing the national debt by a margin that is so small to be largely irrelevant in economic terms".

'A proper debate'

While Sinn Féin finance spokesperson Pearse Doherty claims no case has been made for the sale.

"No credible economic case has been made for the sale of AIB or any part of it. We are talking about selling off a very valuable strategic and financial asset, but why? Who benefits?"

"We know the bankers are keen to sell off the bank so that the €500k salary cap can be dropped and we know the advisors, the likes of Goldman Sachs, are waiting to take their cut of any sale.

He added: "Sinn Féin want a proper debate about the role the State should play in the banking sector instead of rushing in to another grubby privatisation with no thought about the long-term consequences for the economy.

"We need to take a step back and weigh up the evidence, at the very least a full Oireachtas debate and vote on any sale needs to take place."

'Not small change'

While the Social Democrats co-leader, Róisín Shortall said the decision to sell a 25% stake in the bank 'defied logic'.

"As things stand, almost all this money will come to the Exchequer because the State owns 99.9% of the rescued bank.

"This is not small change, and it defies logic that the government would pass up an opportunity to continue to receive these substantial dividends on a yearly basis and invest the money in infrastructure."

"The case for holding onto the shares and investing the dividends makes utter sense, especially as the Government advise us that under current accounting rules the proceeds of any sale cannot be used for infrastructure investment, as it is not considered extra money.

"Because this constraint does not apply to dividends, these could be used to make a real difference to people’s lives."

Additional reporting: Jack Quann