Ireland’s Finance Minister Michael Noonan took the unusual step of warning investors to stay away from shares in government-owned bank AIB because they are ‘overvalued’.
The bank, which still has a significant presence in the UK, is valued at nearly £44 billion (€55 billion). Irish taxpayers gave it a £16 billion (€21 billion) bailout.
Small shareholders here who have seen their savings shrivel since the banking crash have been tempted by news of Ireland’s economic recovery to try and recover lost ground.
But Mr. Noonan was blunt when he warned anyone tempted to buy shares now – before the taxpayer – rescued bank is sold off – will lose money.
“The value attributed to the shares in the stock market at the moment would put a nominal value of €55 billion on AIB, it’s not worth that. So the shares are overvalued but it’s because of the resturcturing.
“So I am issuing a kind of a warning to investors. Wait until it’s restructured before you buy. If you buy now you will lose money,” e told reporters at the opening of a refurbished branch of AIB.
Now after the 2008 crash AIB is returning to good financial health and has recapitalised its balance sheets the Irish government is planning to announce just before Christmas how it plans to sell off the bank.
Mr Noonan said: “It will be a long process. I am not announcing an imminent sale of AIB or anything like that. I am saying that before very long and certainly before Christmas all interests will come together.
“That’s the Department of Finance, AIB and some outside advisors and we will start the process of laying out a blue print which would lead then over quite a significant number of years restoring the bank to the private sector through a public selling of the shares.”
A publicly contrite AIB chief executive David Duffy said the bank had learned its lesson: “We have done enough damage and we will always admit that, in the past. The only way we will be successful in the long term is if we rebuild that brand, and the only way you can do that is by addressing your customers in the way they want to be addressed.”