State hopes to get bailout cash back from main banks

The State could eventually recoup all the cash used to bail out AIB, Bank of Ireland and Permanent TSB, Minister for Finance Michael Noonan has said.

This would leave the €35 billion cost of bailing out Anglo and Irish Nationwide as the final cash cost to the exchequer from the banking collapse.

The Department of Finance has now appointed Goldman Sachs to advise on its options in relation to AIB, the Minister said in an opinion article in The Irish Times.

A move to float or sell a significant minority stake is likely later this year and this will be a key marker of the value of the remaining State bank holdings.

Rescue fund

The Government has been moving to clarify its view on the future of the banks, with Taoiseach Enda Kenny saying that seeking a sale of stakes in the surviving banks to the EU rescue fund was no longer likely to provide the best route forward.

If AIB can be gradually sold in the next few years, the Government hopes the bulk of the €20.8 billion invested in it could be recouped.

However, controversy will continue over the wider economic cost of the bailout and of Ireland being left with the burden of Anglo and Irish Nationwide on the State balance sheet. In the article, Mr Noonan says that, at a minimum, he believes the State can recoup the €18 billion invested in the three surviving banks in 2011.

Already some €5 billion has been recouped from the sale of stakes in Bank of Ireland and the sale of Irish Life.

If conditions continue to improve, Mr Noonan believes the State may eventually get back the €29.4 billion invested in AIB, Bank of Ireland and Permanent TSB since the crisis broke.

Following the EU summit in June 2012 it appeared likely that the Government would be able to sell some of the stakes in the banks to the new EU rescue fund, thus recouping some of the cash paid out by the exchequer. Selling the remaining stakes on the market is now seen as a better way forward by Ministers, but success here would still leave the State carrying the cost of the bailout of Anglo and Irish Nationwide.

Separately, it was learned this weekend that Nama is planning for its run-down by offering a redundancy programme which aims to reduce staff numbers by two-thirds over the next two years from 370 to 125 by the end of next year.