Taxpayers lose €45.7 billion in bank bailouts – C&AG report

The cost of bailing out banks during the financial crisis was €45.7 billion at the end of 2021, the Comptroller and Auditor General (C&AG) has found.

That is worse than late 2018 and previous estimates of the likely eventual recovery, and despite taxpayers notably reclaiming billions from the Bank of Ireland and recovering €4.8 billion in cumulative revenue from Nama.

C&AG examines the net cost of all bank bailouts and reveals that the IBRC, consisting of the former Anglo Irish Bank and Irish Nationwide Building Society, was nationalized at £37.3bn in 2009.

Taxpayers still have €13.1 billion less than AIB, well over a decade after the banking crisis, with Permanent TSB sitting on another €1.5 billion.

The Bank of Ireland is the exception. C&AG put the net recovery from its rescue at the end of 2021 at 1.4 billion in relation to the 4.7 billion euros invested.

However, unlike the figures used by the Treasury, the C&AG calculations also include an estimated interest charge on money borrowed for bank bailouts – some €700-900 million a year since the financial crisis, as well as money reclaimed via the bank levy, dividends and others income.

The latest C&AG balance sheet comes as Treasury Secretary Paschal Donohoe announced the government had resumed its AIB share trading plan, a program to gradually reduce the remaining majority stake in that bank by selling shares through the stock market.
The sale of a portion of the 71.12 percent stake was first announced by Mr. Donohoe last December and became effective in mid-January to reduce government investment in AIB.
The share trading plan was extended in June this year and then suspended on June 28th following the sale of a larger than usual block of 5 shares of the bank’s shares using what is known as an accelerated book construction, placing shares with institutional investors.

Following this sale process, the state agreed to a “lock-up” period, which meant the government could not sell any more shares in the bank for a period of 90 days. Not anymore.
After the extension in June, the plan is due to end no later than January 24 next year unless the minister extends it further.
The state’s stake in AIB has now been reduced to 63.5 percent.
“I will continue to keep other monetization options open should these opportunities present themselves,” said Mr. Donohoe. “This government remains convinced that banking is primarily an activity that should be provided by the private sector and that taxpayer money used to bail out the banks should be reclaimed and used for more productive purposes,” he added .
Last week Mr Donohoe said he expected to announce shortly that the State’s direct holding in the Bank of Ireland had been “reduced to zero”. Taxpayers lose €45.7 billion in bank bailouts – C&AG report

Fry Electronics Team

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