Dáil Éireann Debate, Tuesday - 12 July 2016
199. Deputy Pearse Doherty asked the Minister for Finance the net change in value of shares held by the State in each bank in which he has shares since the referendum on Britain leaving the European Union; and if he will make a statement on the matter. [20798/16]
View answerSince opening on Friday morning 24 June to close of business on Friday last, 8 July, the share price of Bank of Ireland fell by 36% and Permanent TSB by 20% as the market reflected the impact of the UK Referendum result on the UK, Irish and European economies. Over the same period, leading UK banks have fallen by a range of 26%-33% while the European bank sector has fallen by 18%. While there are signs of some stabilisation in recent days, clearly these moves suggest investors believe bank profitability in the coming years will be materially impacted. Indeed analysts have already moved to downgrade their earnings projections for UK and Irish banks and companies in many other sectors too.
Given our substantial financial interest in the banking sector, these developments are disappointing and we continue to closely monitoring events as they evolve. As I indicated in recent PQ responses, the current volatility in the stock markets are such that I expected that any market event involving our shares in the banks was more likely in 2017 than this year. As such the State had no plans to dispose of any of its bank shares in the coming months and no sale proceeds are included in the 2016 budget, so there is no immediate impact on our finances. In fact later this month AIB is still scheduled to redeem its Contingent Capital Note of €1.6bn plus accrued interest.
As part of their day-to-day role, officials in the Shareholding Management Unit will continue to monitor market conditions, review all strategic options relating to our banking investments and will consider from time to time whether the sale of shares would be beneficial for the State. Having said that I have no current plans to sell shares in any of the banks, notwithstanding the flexibility to do so within the Programme for Government.
Note: AIB's share price has fallen by circa 5% over the same period though the very small free float involved means this is not a reliable indicator of the change in the bank's underlying value.
