One of the remarkable unappreciated facts about Ireland since the banking crisis, is the vast sell-off of public assets, sell-offs for the most part overlooked and unreported. NAMA is disposing of an average of €500-750m of assets a month every single month and state-owned banks, IBRC, AIB/EBS and to an extent Bank of Ireland are also disposing of billions per year. How many of you heard about the sale by AIB of €400m of Spanish loans in February 2013?
But you can bet there will be heated debate about the sale of the new National Lottery licence, the retail part of Bord Gais, the harvesting rights at state forestry company Coillte and whatever part of the ESB the Government eventually decides to sell, even though these sell-offs have a relatively modest financial impact.
And because the sale of NAMA and bank assets largely goes unnoticed, there is little or no analysis of whether the deals are good for the State. And even when we do get some details, there is little examination of the transactions and finance minister Michael Noonan bats away questions by claiming commercial confidentiality. Take for example AIB into which we have, so far, shoveled €21bn of bail out funds. In 2010, it sold its 70% stake in the Polish bank, Bank Zachodni WBK for which it received €2.94bn. A few weeks ago, KBC and Banco Santander sold their 21.4% stake in the same bank for €1.2bn – that equates to 34% proportionately more than AIB received, or to put it another way, if AIB had sold at the KBC/Santander price then the sale price would have been €3.925bn, €985m than it in fact received.
Back in 2010, the Minister for Finance was the late Brian Lenihan, the Secretary General at the Department of Finance was Kevin Cardiff since-elevated to the European Court of Auditors, the group managing director at AIB was Colm Doherty, replaced in 2011 by present CEO David Duffy, our public interest directors were and are Dick Spring and Declan Collier. Did they oversee a rotten transaction at fire sale prices?
We are unlikely to find out. And when challenged last week about the transaction, all Minister Noonan could say was that it was “unfortunate” that AIB was required to sell the asset in 2010. Again, it is someone else’s fault.
I wonder what transactions are taking place now today that will be characterized as “unfortunate” in years to come, though given the lack of scrutiny and oversight today, we may be destined to remain ignorant, and perhaps it is better so.
This is the parliamentary question and response referred to above.
Deputy Pearse Doherty: To ask the Minister for Finance if he is concerned that following the recent sale by KBC and Banco Santander of their 21.4% share in the polish bank, Bank Zachodni WBK, for €1.2bn, that Allied Irish Banks in which he holds 99.8% of the shares, sold its 70% share in the same bank for €2.94bn in 2010.
Minister for Finance, Michael Noonan: As the Deputy will be aware the sale of Bank Zachodni WBK in 2010 reduced the capital injected by the State into AIB. It is unfortunate that the bank was required to sell the asset in 2010, however given the scale of losses incurred by AIB in recent years, the bank was required to generate capital in any way that it could in order to reduce the burden on the State.