Dublin Starts Process to Sell Allied Irish Banks

Goldman Sachs will advise Dublin on its options for selling the state-rescued Allied Irish Banks, finance minister Michael Noonan said Monday as the government seeks to recoup taxpayers' cash.

Dublin nationalized 99.8 percent of Allied Irish Banks (AIB) in 2010 at the height of the financial crisis, pumping 20.8 billion euros into the lender.

The appointment of Goldman Sachs marks a key first step towards returning AIB to private ownership.

"While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer," Noonan wrote in The Irish Times.

"The focus will be on ensuring that the best decisions are made regarding potential capital restructuring options and sequencing in order to maximize the return of cash to the State from our AIB investments." 

Ireland's banks were ravaged by the financial crisis and the collapse of property prices, costing the Irish taxpayer 64 billion euros since 2008.

Almost 35 billion euros pumped into Anglo Irish Banks and Irish Nationwide will not be recouped as both institutions have been liquidated.  

The Irish banking sector has emerged from the crisis much smaller, with two "pillar banks" -- AIB and Bank of Ireland, as well as Permanent TSB.

Already some 5.0 billion euros has been recouped from the sale of stakes in Bank of Ireland and Irish Nationwide, the life insurance arm of permanent TSB. Dublin has also made 5.9 billion euros in interest and fees from the banks.

But Noonan hopes Dublin will fully recover the funds invested in AIB, Bank of Ireland and Permanent TSB. 

"If economic and trading conditions continue to improve over the next decade or so, the cash returned to the State combined with the value of any remaining shareholding may exceed the funds invested."