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Government urged to use €3.8 billion from AIB sale to 'build homes, hospitals and schools'

Labour leader Brendan Howlin said that the Irish people “sacrificed so much to protect our banking system”.

Image: Leah Farrell/Rollingnews.ie

Updated 9.34am

THE GOVERNMENT HAS set a price of between €3.90 and €4.90 a share as it looks to sell off shares in AIB.

The move is set to net the exchequer up to €3.8 billion with Minister for Finance Michael Noonan saying that “the time is right” to proceed with the sale of shares.

Noonan added that “a successful transaction would represent an important milestone in our journey to dispose of our banking investments and ultimately recover all the money the Irish State has invested in AIB”.

Labour leader Brendan Howlin, however, told TheJournal.ie that proceeding with the sale was “an act of outrageous contempt for Dáil Éireann” and that the money raised should be used to build schools, homes and hospitals.

The government currently owns 99.8% of the bank, and will sell off 25% of the shares of the bank in this sale.

In the AIB’s prospectus on the matter, it outlines some of the risks considered before making the decision to sell the shares now.

Among them was the outcome of the UK general election, and the upcoming Brexit negotiations.

Although the effects of these remain uncertain, “these events are expected are expected to have a negative effect on Ireland’s GDP growth over the medium term”, AIB said.

It also says that while the Irish economy is performing well now, any deterioration in the global or regional economy “could have an adverse effect on AIB”.

Furthermore, it warns that a change to who makes up the Irish government “may have a material adverse effect on AIB’s business, result of operations, financial condition, ownership and prospects”.

“The company will not receive any proceeds from the Offer,” AIB said.

The final offer price per share is set to be announced on or around 23 June 2017.

During the financial crisis, the State invested up to €20 billion into the bank.

Howlin urged incoming Taoiseach Leo Varadkar to revisit the decision to sell the shares, now that Noonan would be stepping aside from his role as Minister for Finance.

He said: “At the very least, Leo Varadkar should begin Government efforts to change the fiscal rules, as the Labour Party has been doing with our European sister parties for some time now.

Reports this morning suggest that the sale of AIB shares may yield up to €3.8bn. Using this money to build homes and hospitals and schools would give a real benefit to the Irish people, who sacrificed so much to protect our banking system.

When the sale was announced at the end of May, Sinn Féin’s Pearse Doherty said that the “real cost” of selling off the stake in AIB would be social as well as economic.

He said: “The real cost of selling AIB on the cheap is not just the billions lost but also the influence over a banking sector that when left unchecked before crashed the country.”

Labour’s Joan Burton, meanwhile, pointed to recent falls in US bank shares as evidence that selling shares in AIB now was “folly”.

She said: “The Labour Party has called for the Minister to postpone the sale of the shares until the fiscal rules are changed to allow for the proceeds to be invested in the Irish economy where significant infrastructural bottlenecks exist in housing, health, education and transport.”

Read: Banks in Ireland decline to give progress updates on their tracker scandal reviews

Read: ‘Not acceptable’ that AIB could pay no tax on profits for up to 30 years

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Sean Murray

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