The value of taxpayers' stake in Ireland's big banks has dived by €1.3bn

THE STATE’S HOLDING in Ireland’s two pillar banks fell by more than €1 billion over the past year, according to new figures.

The government bailed out both AIB and Bank of Ireland during the recession, and now holds 99.9% and 14% of each organisation respectively.

A valuation carried out for the Ireland Strategic Investment Fund (ISIF), Ireland’s sovereign wealth fund, by accountancy firm EY found that the value of the state’s holding in the banks dropped during the year.

In 2015, Ireland’s stake in AIB was worth €12.2 billion. This has now dropped to €11.3 billion. Whereas the state’s stake in Bank of Ireland was valued at €1.5 billion last year and has now dropped to €1.1 billion.

Since 2009, ISIF has invested €16 billion in AIB and €4.7 billion in Bank of Ireland. To date, it has recouped €6.4 billion from the two banks through several methods, such as receiving dividends.

Going private

The government and Finance Minister Michael Noonan have repeatedly indicated that they plan to return AIB to private hands as soon as possible.

Finance Minister Michael Noonan

It is likely that 25% of AIB will be floated on the stock markets. While there is no fixed date, Noonan has previously said that a flotation will likely take place ”during 2017 or indeed early 2018″.

Based on the current valuation, selling 25% of AIB would net the state €2.8 billion. However, how much the state actually recoups will depend on a few things, such as the timing of the float and the appetite of investors.

‘Fixed the bank’

AIB chief executive Bernard Byrne has repeatedly said that the organisation is ready for a flotation.

In September he said: “The value creation came from fixing the things that broke the bank. That phase is over. We have fixed the bank.

“We think it is in the interest of all concerned that the continuation of capital from private to state continues but ultimately that is timing for the Minister (of Finance) to choose.”

The drop in the value of the two banks reflects a trend largely taking place across Europe over the past year or so.

A variety of international events, such as the Brexit vote, have brought uncertainty to the markets and impacted on the share price of many financial institutions.