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« Paddy McKillen sues for defamation
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Deputy Peter Mathews calls Noonan’s deal to sell Bank of Ireland stake “idiotic”

January 6, 2013 by namawinelake

PeterMathews

“Deputy Peter Mathews: As Dr. Somers said, the pension fund that was built up for the people of Ireland has decreased. They stupidly raided it. They gave Wilbur Ross 35% of the other bank for €1 billion, when our State paid €5 billion for 15% of the bank. A junior certificate student would know that is stupid.

Dr. Michael Somers: Obviously, I do not know exactly who it was. I would have had to swallow very hard to do a deal like that, but anyway the deal was done.

Deputy Peter Mathews:  I can read between the lines. It is an idiotic deal.” Oireachtas Finance and Public Expenditure and Reform committee hearing with AIB directors on 20th December 2012.

Despite criticizing the Fine Gael TD for Dublin South on here on a couple of occasions – here and here, which provoked a response from the deputy himself – it is indisputable that he is one of the 166 TDs in the Dail who does have a lifetime career in banking, and despite having to put up with the verbosity and lengthily-parsed speeches with which he responds to the simplest of questions, the fact is that (a) he is an expert in his field and (b) he is supposedly in a place where he can influence government policy for the greater good of the nation.

He was one of the few TDs and senators who really had any prospect of making a mark or developing an argument at the recent Oireachtas hearing with public interest directors on 19th and 20th December 2012, the partial transcript of which was made available online yesterday.

Unfortunately, Deputy Mathews was only give 300 seconds to question the directors, about which he complained.

“Deputy Peter Mathews:   For the record, I am very disappointed that I get five minutes compared to 12 minutes for other speakers.

Chairman:  That is a matter for the Fine Gael Party. If Deputy Mathews wishes to speak first or second he must raise the issue with his party. I will not deal with the matter. I do not accept the criticism. It is for the Deputy’s party to decide who gets prioritised within the party.”

Deputy Mathews didn’t have the opportunity to ask the Bank of Ireland directors about the deal in July 2011 where 20% of Bank of Ireland was sold by Minister for Finance Michael Noonan, as the controller of the State’s state in the banks, to a group of North American investors including Wilbur Ross. At the time, Minister Noonan hailed the deal as “truly another very positive development for the Irish economy”. In the Oireachtas just before Christmas, Deputy Mathews described it as “idiocatic” saying a “junior certificate student would know that is stupid”

This was the deal where a large part of the State’s stake built up at a cost of €5bn was sold to the US and Canadian investors for just over €1bn, though the deal has a lot of strings attached. Bank of Ireland remains the only one of the banks which the State has guaranteed to remain outside our control as we now have a stake of 15% of the ordinary shares.

Deputy Mathews gained a reputation as an Irish Cassandra in 2009 and 2010 where he trumpeted the risks of massive additional losses in the guaranteed banks, and warned against the State covering the losses, lest it beggar the society. Turning up with annual reports on current affairs programmes, he acquired a reputation for being a plain-speaking if somewhat contrarian and verbose commentator on the unfolding crisis, and it was no surprise when he was elected on his first attempt to the Dublin South constituency, nudging justice minister Alan Shatter into fifth place.

Deputy Mathews duly took his place on the back benches and observed as political insiders took the key jobs in finance and economics. Although he tells us with a nod and a wink that he talks with Minister Noonan and gives the impression that his views are listened to, it has become obvious that he is a maverick in a conservative political party. He is frequently described as an Independent and in March 2012 was placed in the farcical  position of voting against his own proposal at an Oireachtas committee. Describing Minister Noonan’s deal with Bank of Ireland as “idiotic” can only deepen the rift between the mainstream of Fine Gael.

Whilst not the focus of this blogpost, Deputy Mathews did assert that there was potentially another €60bn that would be required in the Irish banking system – that’s on top of the €64bn direct bail-out of the banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans.

“Deputy Peter Mathews:   I think the survivor bank system needs further capitalisation. In the case of Bank of Ireland it could be €10 billion minimally to get its provisions right so that it can start the sort of work that would follow from the insolvency stuff. I think that AIB will need more, too, as will Permanent TSB. The IBRC issue is being lumped onto the main national debt. In all, we are talking about a minimum of about €60 billion. However, we need people who really understand it and who can, without having to shuffle through opening statements with simultaneous translation, get it across, eye to eye with the other person.”

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Posted in Banks, IMF, Irish economy, Politics | 15 Comments

15 Responses

  1. on January 6, 2013 at 2:00 pm Anonymous

    […] Posted by Iphonista @OP…..link? Deputy Peter Mathews calls Noonan Sign in or Register Now to […]


  2. on January 6, 2013 at 3:15 pm Gregory Connor

    Peter Matthews cannot have it both ways. EITHER the 1 billion received for a 35% stake in Bank of Ireland equity was a stupid mistake by the government OR Bank of Ireland needs another 10 billion injected to be adequately capitalized. One statement or the other statement is fine as an opinion, but the two together do not make sense. Injecting another 10 billion equity into BoI would basically require that the existing shareholders proportional ownership would be set near zero, and the existing shares would be worth close to zero. Selling shares eventually worth zero for 1 billion does not sound “too stupid for a Junior Cert student”.


    • on January 6, 2013 at 5:30 pm OMF

      You seem to be operating under the assumption that government capital injections confer some degree of public ownership in return for public money. In BoI’s case, we know for a fact that this is a false presumption.


  3. on January 6, 2013 at 5:08 pm JR

    in the banking world the above two statements would not be mutually exclusive, it’s all about the detail i.e. there could be a clause in the purchase agreement that any further capitilisation in relation to existing loans is 100% covered by Citizen Joe. stupidity know no bounds….


  4. on January 6, 2013 at 6:50 pm Gregory Connor

    OK maybe — or Peter Matthews has lots of influential friend with massive BTL losses and he wants the taxpayer to bail them out, while treating the taxpayer cost as if it was being paid “by the banks”. Channel 10 billion more of taxpayer funds through the banks and force them to give it to middle class mortgage holders. There is lots of that notion floating around in the Dail and Seanad. Anyway I am glad he is speaking out but worry that his line of argument seems inconsistent and worry there might be hidden political motivations.


  5. on January 7, 2013 at 4:16 am grumpy

    The detail of the agreement with Wilbur Ross is key to this – and, given the tendency of Irish governments to adhere to imaginary/non-existent side letters and perceived winks and nods, I don’t mean what has made it into the papers.

    Recaps are dependent, at least in timing, on policy. Wilbur could have received assurances regarding the impact on his stake of debt write down policy and personal insolvency law etc.


  6. on January 7, 2013 at 12:10 pm Prediction: 15% Housing Price Jump in the next 12 Months - Page 121

    […] Posted by Dub01 Am i really getting good value Deputy Peter Mathews calls Noonan Sign in or Register Now to […]


  7. on January 10, 2013 at 3:37 am who_shot_the_tiger

    For Peter Mathews, who needs to be free of his shackles:

    I know what the caged bird feels, alas!
    
When the sun is bright on the upland slopes; 

    When the wind stirs soft through the springing grass,
    
And the river flows like a stream of glass;
    
When the first bird sings and the first bud opes,
    
And the faint perfume from its chalice steals–
    
I know what the caged bird feels!

    

I know why the caged bird beats his wing 

    Till its blood is red on the cruel bars;
    
For he must fly back to his perch and cling
    
When he fain would be on the bough a-swing;
    
And a pain still throbs in the old, old scars
    
And they pulse again with a keener sting–
    
I know why he beats his wing!


    
I know why the caged bird sings, ah me,
    
When his wing is bruised and his bosom sore,–
    
When he beats his bars and he would be free;
    
It is not a carol of joy or glee,
    
But a prayer that he sends from his heart’s deep core,
    
But a plea, that upward to Heaven he flings–
    
I know why the caged bird sings!

    Paul Laurence Dunbar


  8. on January 13, 2013 at 1:17 pm FITCH - Irish House Prices to drop 20% - Page 38

    […] banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans. Deputy Peter Mathews calls Noonan Sign in or Register Now to […]


  9. on January 16, 2013 at 9:12 pm Farage: Let Them Eat Cake...

    […] banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans. Deputy Peter Mathews calls Noonan Sign in or Register Now to […]


  10. on January 18, 2013 at 12:24 pm Can we say we are now over the worst of the eurozone sovereign debt crisis? - Page 7

    […] banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans. Deputy Peter Mathews calls Noonan Will Peteser bring down the re-bluffery??? Sign in or Register Now to […]


  11. on January 30, 2013 at 1:01 am To austerity fans: what'll happen if we impose the cuts you want? - Page 9

    […] […]


  12. on February 28, 2013 at 11:52 pm Residential Property Prices fall by 3.3% in the year to January 2013 - Page 17

    […] banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans. Deputy Peter Mathews calls Noonan Sign in or Register Now to […]


  13. on March 1, 2013 at 11:37 pm Peter Mathews (FG TD) calls for Property Tax to be scrapped via Supplementary Budget - Page 8

    […] banks and the €5.6bn of state-aid paid by NAMA to the banks for the acquisition of loans. Deputy Peter Mathews calls Noonan Sanction this Ry – Muthhafukkah Sign in or Register Now to […]


  14. on March 27, 2013 at 4:47 pm Anonymous

    […] Deputy Peter Mathews calls Noonan Sign in or Register Now to reply […]



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