After it was revealed that the EU have put no legal requirement on AIB to repay €21 billion of tax payer's money invested to bail it out, Michael Noonan "issued a warning to investors" not to buy shares in the bank.
As the currently available trading stock of the bank is less than 1% , the other 99% being owned by the State one could have imagined this would have had little effect on the share price and thus the market valuation of the company. However with the re-privatisation of the bank due to take place by the middle of next year, traders dumped shares in the hope of not losing money on their holdings.
Noonan's statement of revelation that the bank is currently over-valued however seems to be a deliberate manipulation of the market. What Finance Director of any company would publicly reveal such information and not expect that the value of their company's shares would plummet?
With a debt owed to the taxpayer of € 21 billion wiped off the company's balance sheet, and the resulting loss of a further € 16 billion in the value of shares, the Irish taxpayer has, in one week!, been stung for another € 37 billion on top of previous bailout and bond costs.
There is no gain for the taxpayer if Noonan buys up the outstanding 1%.
So what is the effect of Noonan's announcement?
Well they're certainly not the unemployed; the working public on minimum wage and earning at or below the industrial average; the young families trying desperately to save money to buy new homes despite being massively overtaxed.
They are not the pensioners who face another winter risking their lives with a choice between food and heat.
They are not the single fathers who are between one and two thousand euro worse off in income tax after two budgets while TDs are seven hundred euro better off.
They are not the families crippled with bills who have lost medical cards for their children, many with serious illness and painful disability.
They are not the families being launched mercilessly into the street by the bailed-out banks for mortgage arrears with no protection from the State.
The investors are the same gamblers that drove the Irish economy over the cliff and were thrown a rope by two governments that cost € 70 billion paid for with our taxes.
Michael Noonan has once again proven what has become painfully obvious to the Irish people. That Business and Banking come first ... and People a very poor second.
On a visit to New York on Nov 14th, the same day Noonan took another € 37 billion from people's pockets, Enda Kenny was in New York where he did about the only thing he is intellectually capapble of doing ... pushing the starting button to open trading on the New York Stock Exchange like a bewildered Homer Simpson.
Later that day, at a function for major business leaders in the US, Kenny announced that "we" would rebuild Ireiand to be FIRST the best small country in the world to do business, SECOND the best small country in the world to raise a family and THIRD the best small country in the world to grow old.
1st BUSINESS (MONEY)
2nd PEOPLE
THAT is the priority of this government and indeed the previous government, who sat back while the contrived privatisatio of Ireland Inc. was engineered by the world's financial vultures.
Politicians are proving to us on a DAILY BASIS that the people come second. That MONEY comes first, for them and their mates, and people come a poor second ... poor because it's the PEOPLE'S money that make the RICH rich.
The banks have been bailed-out and well taekn care of ... and now they have been given a heads up by Noonan so that if they buy AIB now - in HIS WORDS - they will lose money.
As Irish Minister for Finance and controller of the PEOPLE'S AIB bank, it is Noonan's job to MAXIMISE the return from the sale of AIB for the Irish people. It would seem to me that his absolute duty is to manage the bank so that the share price is ABSOLUTELY MAXIMISED ...even if that means it is over-valued ... becauser that is how the people will benefit most from the reprivatisation of the bank.
Noonan has not done that. He has protected bankers', bondholders', investment companies' and traders' money ... by taking it once again from the people.
This is an absolute betrayal of trust, a dereliction of his duty to the public and the actions of someone with a vested interest. It is Insider Trading.
I wonder how many shares Michael Noonan picked up for himself on the Stock Exchange on November 15th...?
Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. In various countries, trading based on insider information is illegal.
John Walsh Business Editor Irish Examiner Nov 11 2014
AIB gets a ‘free pass’ on €21bn it owes us
The EU has put no legal requirement on AIB to repay the €21bn in bailout funds it has received from Irish taxpayers.
In the restructuring document published by the Directorate General for Competition at the European Commission, it stipulates that AIB will have to pay the Government excess capital it is holding above legal requirements at the end of December 2016. This is unlikely to be more than a few hundred million euro.
AIB has received just under €21bn in state aid from the Government since 2009. Michael Noonan, the finance minister, holds 99.8% of the common equity in the bank as well as €3.5bn in preference shares and €1.6bn of contingent convertible (CoCo) bonds. The Government has put a current valuation on the bank of just under €14bn.
One market source described the European Commission’s ruling on AIB as a “free pass”.
However, a spokesman for the Department of Finance said that the Government, as the majority shareholder, would do what was best for the taxpayer in terms of recouping as much of the original investment as possible.
Michael Noonan speaking at the launch of AIB flagship branch in Limerick Nov 17 2014
Noonan urges investors not to buy shares
“The value attributed to the shares in the stock market at the moment would put a nominal value of €55bn on AIB, it’s not worth that. So the shares are overvalued but it’s because of the restructuring.
“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.”
Donal O'Donovan Irish Independent Nov 18 2014
€16bn 'wiped off' AIB shares following Noonan warning on value
Shares in AIB have fallen by almost a fifth today to 7.2 cents each. Together with yesterday’s sharp fall it means around €16bn of notional value has been wiped out since yesterday afternoon.
On Monday the Minister for Finance Michael Noonan warned that shares in the bank were overvalued by the markets – prompting the sell off.
The minister will bring forward plans by the end of the year setting out the route to reprivatisation of AIB.
Based on current trading AIB shares still trade at a multiple to most banks, including Bank of Ireland, so further dramatic falls are expected.
That privatisation process will dramatically increase the portion of bank shares available to trade from the current minimal levels of less than 1pc.
The sale process, which will be accompanied by a tidying up exercise to reduce the number of outstanding shares, is expected to kick off in earnest during the second quarter of next year.
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