Why sell AIB

[Gerry Canning]

We are told AIB is properly funded.
We have put 20 Billion into AIB.
We are told AIB are now making profits.

I can only see ideological reasons why we should sell AIB.
Do Government still believe Banks should be left to the Market?

Since we own AIB ,we are its shareholders, we can have it operate at a small healthy profit.
Since we own AIB , we can pass on rate cuts eg on (SVR) Standard Rate Mortgages.ie shareholders benefit.

Would it not mean that all Banks would have to compete with our Bank?
Would it not future proof us from Bank failures?.

 

[Brendan Burgess]

And what exactly has this to do with Cars, cycling and transport?

 

[Gerry Canning]

Sorry Brendan ,

My technical skills?

 

[Purple]

And what exactly has this to do with Cars, cycling and transport?

Car loans?

 

[Gerry Canning]

Put it in wrong forum ,my fault.

Question still stands , and I think it is important .
Maybe it is just me?

 

[Purple]

Put it in wrong forum ,my fault.

Question still stands , and I think it is important .
Maybe it is just me?

It's an excellent question but that's never stopped me making stupid and childish comments before

 

[rob oyle]

We are told AIB is properly funded.
We have put 20 Billion into AIB.
We are told AIB are now making profits.

I can only see ideological reasons why we should sell AIB.
Do Government still believe Banks should be left to the Market?

Since we own AIB ,we are its shareholders, we can have it operate at a small healthy profit.
Since we own AIB , we can pass on rate cuts eg on (SVR) Standard Rate Mortgages.ie shareholders benefit.

Would it not mean that all Banks would have to compete with our Bank?
Would it not future proof us from Bank failures?.

Your logic is fairly sound and ideology aside, I think the major issue would be State involvement in private enterprise - the State invests €20,000,000,000 (count 'em all!) in Irish bank and subsidises lower-than-market mortgage rates. Europe would have an issue with that sooner rather than later.

 

[The_Banker]

Is Noonan making a decision to sell or is the ECB forcing his hand?

 

[Gerry Canning]

purple. Couldn,t have resisted a (smart) comment myself !
.................................................
rob oyle.
Why is State involvement a major issue.
1. State does education , because markets won,t.Or at best cherry pick.
2. State does infrastructure , because markets won,t.Or at best cherry pick.
3. State does Health , because markets won,t.eg in USA the Market has a large hand in a mixed up people unfriendly system.
State takes a hold in any operation that impacts on the general community.

Surely the 20,000,000,000 is a warning , not to hand it back once we have repaired it.
We would not be subsidising lower than market rates , I stated AIB must be profitable , it is up to shareholders ie us, to decide what way that dividend is paid out.
So put AIB in a semi-state operation and like ESB it can work away.
Europe cannot have any issue , and even if they do its a fight worth stalling on.

AIB today are to explain logic in high SVR rates , be very sure that whilst we own them they will move a bit.
If we do not own them the cry will be (Market Forces)

I think my question still stands.ie Why sell AIB?
..............
the Banker.
I would think ECB would prefer no state involvement.
I would think this feeling he must sell from Mr Noonan is more ideologically driven than any wish to aid society.
Could it be as simple as , we simply do not wish to be Bankers?

If so 20,000,000,000 is expensive , particularly if we have no future control.

 

[Leo]

I think my question still stands.ie Why sell AIB?

If the state doesn't sell, will they become another ESB, or an Irish Rail or Dublin Bus, needing huge support from the tax payer to remain in existence? I fear we don't have a good record of the state running any business efficiently.

 

[Purple]

If the state doesn't sell, will they become another ESB, or an Irish Rail or Dublin Bus, needing huge support from the tax payer to remain in existence? I fear we don't have a good record of the state running any business efficiently.

Or Irish Steel or any other state owned, so called commercial, company.

 

[Gerry Canning]

Leo,
Oh yeah ! what do we call 20,000,000,000 of our money. So we let Market have AIB and when it fails again, Mr Taxpayer re-bails AIB out . Remember this is the 2nd time we bailed them out.Banks are too big to be left to Bankers.
.
When State owned ACC Bank, it turned a profit. Then sold ACC to Rabobank , who have lost a lot on it.
State own ESB and from what I see , are they bad? In UK it is reckoned that Power transmission has been starved of funds by private owners and guess who will eventually have to pay, yup Mr Taxpayer.
The rail networks were privatised in UK , now it looks like Mr Taxpayer is being forced to pay for upgrades.
Purple.
Steelworks worldwide have generally been losers state or private.
Is Coillte/BordNaMona not in profit.

Have we not all got sucked into Mr Market man knows best?
From what I see of Mr Market man , he generally goes for the quick buck and leaves us to tidy up.
Remember that Mighty market company Quinn Insurance, the poster boy for Market forces.?
For God knows how long we all pay 2% more on insurances to cover Mr Market.

If it makes Financial Long Term sense to sell AIB ,give me the figures please.
Do not give me the well worn State can,t manage.

 

[Leo]

In UK it is reckoned that Power transmission has been starved of funds by private owners and guess who will eventually have to pay, yup Mr Taxpayer.
The rail networks were privatised in UK , now it looks like Mr Taxpayer is being forced to pay for upgrades.

You know the Irish grid, rail network, water-infrastructure, actually, almost any state owned infrastructure etc. has been critically underfunded by the government for decades, so that argument doesn't hold up. We really only got decent investment in the roads network when the private sector, and tolling came into play.

You do know Coillte is operated as a commercial entity and is set up as a private limited company? The shares are all held by the state, but the staff are not state employees and do not enjoy the bloated salaries, benefits and entitlements some of the state bodies do.

 

[Purple]

Purple.
Steelworks worldwide have generally been losers state or private.

That's not true. There is more steel production than ever at the moment.
The Union dominated Steel Mills have closed everywhere but the ones that were run properly have survived. There are steel mills in France, Italy and plenty of other European countries as well as all over the USA. It's only the Union dominated ones that closed and as all of the Mills in the UK were Union dominated they all closed.

 

[Gerry Canning]

Purple.

If you check steel mills you will find huge cross subsidies from States in many cases and unions playing hardball, I accept all that. If checked I would think it was mostly just lower costs that moved Steel Mills, same happened with clothing eg Fruit of The Loom here in Donegal moved to Nth Africa ,simply because Nth Africa was cheaper.

This discussion is about Banks. We cannot do with out them and I am loathe to again leave AIB in the hands of the pernicious Market unless I can get good reason to do so.
I think one 20,000,000,000 is enough !

 

[Gerry Canning]

Purple.

If you check steel mills you will find huge cross subsidies from States in many cases and unions playing hardball, I accept all that. If checked I would think it was mostly just lower costs that moved Steel Mills, same happened with clothing eg Fruit of The Loom here in Donegal moved to Nth Africa ,simply because Nth Africa was cheaper.

This discussion is about Banks. We cannot do with out them and I am loathe to again leave AIB in the hands of the pernicious Market unless I can get good reason to do so.
I think one 20,000,000,000 is enough !

I see Pearse Doherty has raised (why sell AIB ?)
I see Ulster and BOI have said they will not reduce Standard Variable Rates (SVR)

I confidently expect that AIB will be forced by its owners (me) to reduce SVRs.
That puts pressure on the rest .
More importantly , it will be an example of how owning a Bank gives a Citizen Dividend.

I asked at head of thread WHY SELL AIB, ?
Are there good logical reasons ? Please let me know.

 

[Leo]

If AIB are forced to set policy based on public demand, then we as taxpayers will end up subsidising them. If that happens, then we're at risk of losing the little competition we have in the market.

 

[Conan]

The problem is where does "public demand" end?
Today it may be reducing SVR mortgages, tomorrow it may be lending to SME's, the next might be resistance to evictions even for borrowers refusing to pay or engage. Where does it stop?
Do we turn AIB from a commercial venture into some form of political charity case where politicians are influencing Bank decisions based on satisfying the (unreasonable?) demands of some vocal group?

 

[Gerry Canning]

The problem is where does "public demand" end?
Today it may be reducing SVR mortgages, tomorrow it may be lending to SME's, the next might be resistance to evictions even for borrowers refusing to pay or engage. Where does it stop?
Do we turn AIB from a commercial venture into some form of political charity case where politicians are influencing Bank decisions based on satisfying the (unreasonable?) demands of some vocal group?

Am I really missing something here?

For the 2nd time in my life we Citizens have bailed out AIB.

This time it has cost us 20,000,000,000.So Leo we as (taxpayers ended up subsidising them).
Is 20,000,000,000, not much much worse than any incompetence/political shenanigans perpetrated by an Statist company.
Conan, AIB have reproven not to be a commercial venture ,and am I missing something but are SVR mortgage holders not being fleeced? I agree the total resistance to evictions is wrong,but is that not more to law rather than lending issues + if Banks repo,d they have to account immediately for that loss= ouch , Mr Citizen re- subsidizes them!
AIB is patently a Charity case , run by proven incompetents.


I genuinely cannot understand why we should yet again pass AIB into the clutches of a Market that has a propensity to fail and then fail better again.
When the State owned ACC Bank , I remember no huge state interference.

And the beauty of it is ,when AIB refail in another 20 years,
Mr Citizen will re-bail them out.

I fervently ask; should we entrust our money to entities who have a proven track record of incompetency, greed,failure ?
The answer appears YES , because we will take the Risk and they know they are too big to fail.

Must be a book in this?

It is a bit Brave New Worldish.

State (Bad) Market (good)

unless market fails !

 

[Leo]

Am I really missing something here?

Maybe all the counter arguments already stated?

This time it has cost us 20,000,000,000.So Leo we as (taxpayers ended up subsidising them).

All the more reason to sell and get as much money back as possible, and then re-invest that in the services governments should be more involved in.

...a Market that has a propensity to fail and then fail better again.

If that were true, there would be no market at this point.

When the State owned ACC Bank , I remember no huge state interference.

The government forcing AIB to lower SVRs when no one else in the market is doing so, is massive interference in what is supposed to be an open market. This is a move that may result in problems down the line for AIB in terms of competition / state aid law.

Must be a book in this?

There have been more than 440 views of this thread, which is quite low relatively speaking. So I'd suggest interest isn't huge, and also you're the only voice on the State ownership is better side. Don't go putting the house on it being a best-seller.