AIB paying no tax

[Firefly]

Now I think I see your difficulty - reality just doesn't fit your agenda.

No problem, just invent an alternative reality!

People are blue in the face pointing out the ridiculousness of what you're saying, BigShort.

The losses are reflected in the price received for the shares.

BigShort, stop hurling personal insults at other posters.

Listen to the substance of what Sarenco and I are saying.

You seem to have a blindspot in relation to this issue.

Sums it all up.

No, I just try to live by the "don't feed the trolls" motto.

Recently, for the first time ever, I have used the "Ignore Member" option in AAM and I must say it's working a treat!

There are surely different types of trolls out there...some just messing, but others who will argue with anyone about anything and bring threads constantly off-topic and down rabbit holes.

 

[TheBigShort]

The proof is never in the pudding, the proof of the pudding is in the eating.

True indeed!

I've never heard anyone blame the poor for the bailout.

Me neither. Of course that's not what I said.

Regardless, I would be interested in hearing your own views on the government policy to unwind its position from AIB (without regurgitating the argument above). Do you think the State is getting a good deal? Do you think investors are getting a good deal? Is it a win-win? Or is anyone losing out?
My view is that the State is losing out. I say this on the basis that the company in now profitable. It's projections, as I understand them, are to grow those profits. The bank has also secured a valuable tax deferred asset up to €3bn, facilitating the bank to profit with 0% CT for the next 20yrs, according to the CEO. As a 100% stakeholder, the State should have held on for a lot longer, in my view.

 

[TheBigShort]

Recently, for the first time ever, I have used the "Ignore Member" option in AAM and I must say it's working a treat!

There are surely different types of trolls out there...some just messing, but others who will argue with anyone about anything and bring threads constantly off-topic and down rabbit holes.

This comment is off-topic. A rabbit-hole in itself, please go away troll.

 

[Purple]

Regardless, I would be interested in hearing your own views on the government policy to unwind its position from AIB (without regurgitating the argument above). Do you think the State is getting a good deal? Do you think investors are getting a good deal? Is it a win-win? Or is anyone losing out?
My view is that the State is losing out. I say this on the basis that the company in now profitable. It's projections, as I understand them, are to grow those profits. The bank has also secured a valuable tax deferred asset up to €3bn, facilitating the bank to profit with 0% CT for the next 20yrs, according to the CEO. As a 100% stakeholder, the State should have held on for a lot longer, in my view.

The State should not own businesses. It is not its function and is an encroachment into and erosion of the freedom of the citizen. That said owning any profitable business is a benefit to the owner but the State needs the money now to pay wage and welfare rates which are unsustainable without borrowing or selling assets.
If you think the State should own AIB because it is profitable do you think they should also buy shops and pubs and other profitable businesses?

 

[Gordon Gekko]

Look at it another way; the State derisked its position (note that it did not sell 100% of its holding).

A position in a business that has returned to profitability and that owns circa 40% of the market.

It has a deferred tax asset of €3bn but that's a red herring because it's built into the share price.

However, it's also a business that is not without headwinds; decreasing mortgage rates, disintermediation, the likes of Currency Fair etc trying to steal its lunch.

Selling out 25% at a circa €12/13bn valuation is probably prudent.

The deferred tax asset stuff is Sunday World-esque, an example of laypeople just not getting markets.

 

[TheBigShort]

The State should not own businesses.

I agree in general, unless there is a market failure in the private sector and the business is of, or considered as, national strategic importance. But that is a different topic altogether, the focus of this topic is AIB and the government policy to unwind its position now.

That said owning any profitable business is a benefit to the owner but the State needs the money now to pay wage and welfare rates which are unsustainable without borrowing or selling assets.

Granted, but knowing what we know about the profitability of this business, and how much taxes were used to prop it up, there could be other assets the government could sell off that would realise an overall financial gain to State, rather than one that had only returned €7 out of €21bn before the sale of the 25% stake.

If you think the State should own AIB because it is profitable do you think they should also buy shops and pubs and other profitable businesses?

I think the State should own AIB until such time as the €21bn bailout is returnable to the state in full, plus the cost of interest payments on the €21bn used to bailout AIB, plus a clear profit (through the sale of shares of the bank) for the benefit of Irish taxpayers.
It is my view that this is best achieved by holding its stake in AIB, utilising the deferred tax asset in full applicable to profits, and that the proceeds of the sale of the bank should represent a profit for the State and not merely a retrieval of taxes used for the bailout.
The current government policy is an opportunity lost.

 

[Purple]

I think the State should own AIB until such time as the €21bn bailout is returnable to the state in full, plus the cost of interest payments on the €21bn used to bailout AIB, plus a clear profit (through the sale of shares of the bank) for the benefit of Irish taxpayers.
It is my view that this is best achieved by holding its stake in AIB, utilising the deferred tax asset in full applicable to profits, and that the proceeds of the sale of the bank should represent a profit for the State and not merely a retrieval of taxes used for the bailout.

The State will get all of its money back (or more accurately the money it borrowed) by the time AIB is fully sold off. That's good enough for me.

By the way, does anyone know the cost of funding the hole in AIB's DB pension fund? How much has AIB pumped into that over the years? I know it is on surplus at the moment but it was over a billion in the red a few years ago. It can just as easily be said that a more equitable pension arrangement would have saved the State a serious amount of money.