Fianna Fáil Spokesperson on Finance Michael McGrath has described the government’s appointment of Goldman Sachs to advise on a sale of the State’s stake in AIB as indicative of an apparent acceptance on its part that the prospects for a retrospective deal on bank debt are all but gone.
Deputy McGrath commented “This is a dramatic U-turn on the part of the Government. The June 2012 EU summit declaration, which was described by the government as both “seismic” and a “game changer” at the time, now seems a very distant memory. Fianna Fáil is not averse to the State divesting itself of at least some of its shareholding in AIB at an appropriate time, but there should be no question of selling any of our shareholding in the bank pending the outcome of the negotiation of a bank debt deal. Selling equity share capital in AIB now would be a complicating factor in that arrangement.
“The Minister previously indicated that an application to the European Stability Mechanism was being prepared for retrospective bank recapitalisation. It is entirely premature to speak about selling part of our shareholding in AIB until there is full clarity on the outcome of this process. If the Minister has had some indication that this process is doomed to failure, he should provide that information to the public. AIB is in recovery, but it still has a distance to travel. Divesting our stake in the bank prior to a full review of the future of banking in the State risks making permanent the uncompetitive nature of the system.
“On Morning Ireland this morning, the Minister of State at the Department of Finance was unable to state the fee structure that would be in place though he suggested that it may be provided pro bono. The idea that Goldman Sachs would not charge for its services is entirely implausible. If they are not charging an upfront fee, it is because they perceive an opportunity for much greater payments down the line possibly from underwriting a sale of the State’s shareholding. The Minister needs to clarify what fee structure has been put in place and if it is in the best interests of the taxpayer.
“The state of Ireland’s banking system needs to be judged on the basis of how well the banks are meeting the needs of the economy. On issues such as lending to SMEs, restructuring personal and corporate debt and dealing with long-term mortgage arrears, the banks operating in Ireland have a long way to go before you can say they are repaired.”