# Why sell AIB



## Gerry Canning (21 Apr 2015)

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?.


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## Brendan Burgess (21 Apr 2015)

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


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## Gerry Canning (21 Apr 2015)

*Sorry Brendan , 

My technical skills?*


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## Purple (21 Apr 2015)

Brendan Burgess said:


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


Car loans?


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## Gerry Canning (21 Apr 2015)

Put it in wrong forum ,my fault.

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


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## Purple (21 Apr 2015)

Gerry Canning said:


> 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


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## rob oyle (21 Apr 2015)

Gerry Canning said:


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



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.


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## The_Banker (21 Apr 2015)

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


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## Gerry Canning (22 Apr 2015)

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.


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## Leo (22 Apr 2015)

Gerry Canning said:


> 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.


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## Purple (22 Apr 2015)

Leo said:


> 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.


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## Gerry Canning (22 Apr 2015)

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.


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## Leo (22 Apr 2015)

Gerry Canning said:


> 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.


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## Purple (23 Apr 2015)

Gerry Canning said:


> 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.


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## Gerry Canning (23 Apr 2015)

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 !


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## Gerry Canning (30 Apr 2015)

Gerry Canning said:


> 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.
> 
> ...


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.


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## Leo (30 Apr 2015)

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.


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## Conan (30 Apr 2015)

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?


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## Gerry Canning (1 May 2015)

Conan said:


> 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 !


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## Leo (1 May 2015)

Gerry Canning said:


> Am I really missing something here?



Maybe all the counter arguments already stated?



Gerry Canning said:


> 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.
> 
> ...


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## Gerry Canning (5 May 2015)

What counter arguments that relate to Banking?.

I have a very strong feeling that we have all been indoctrinated that the Market knows best.
Indeed I fully agree that Market does know best, but only if it includes Banking ,which it patently does not include.

So in Banking , Market was suspended and we bailed the Banks out.
So we let AIB go to Market , AIB gives millions to new Private Shareholders for another 20 years , and when it re-blows up in 20 years Irish Citizens bail them out.

I think my question still stands.


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## Leo (5 May 2015)

Competition and state aid legislation? No comment on the impacts there for a start. Government interference in the market, what impact will that have on competition? 

You seem to ignore the fact that the bailout was a government decision, not a commercial one.


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## Gerry Canning (6 May 2015)

Leo said:


> Competition and state aid legislation? No comment on the impacts there for a start. Government interference in the market, what impact will that have on competition?
> 
> You seem to ignore the fact that the bailout was a government decision, not a commercial one.


......................

You have hit it .
Let Banks stay with Market whilst they make money.
Let Banks get too important to fail.
Let Banks be bailed out by Joe Citizen.
......................
Question still stands.

(never sell a laying hen)


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## TarfHead (10 May 2015)

Gerry Canning said:


> 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 .



Assume the State sells AIB.  Who benefits ? The State.

Assume the State retains its ownership of AIB and uses its influence to benefit customers with SVR mortgages. Who benefits ?  AIB customers with SVR mortgages.

Expressed in these terms, the needs of State (i.e. you and me) should outweigh those of AIB customers with SVR mortgages (i.e. 90-something % of the State).  That's tough on AIB customers with SVR mortgages, but there are no easy choices in this matter.

As for "_puts pressure on the rest_", I don't see BOI or UB/RBS management yielding to Government pressure or public mood.


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## Gerry Canning (14 May 2015)

Tarfhead,

Quote {needs of state should outweigh AIB SVR Mortgage holders}

If AIB reduce rates by 1.5% on their SVR , as sure as night follows day the rest will follow.
What that means is the State ie you and me , will benefit on.
1. Svr mortgages from all banks reduce ,that is a state wide benefit.
2. Long term rates will stay at a reason able level.If they can overcharge as in SVRs they will.
3. I have no hard issue selling AIB ,but worry it is ideologically driven , not driven for our medium/long term benefit.
4. I worry that putting them back into the Market will leave us exposed to re bail them out in the future. (remember in my life-time we have bailed them out twice, and it is the same management in place)


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## Leo (14 May 2015)

I don't think many would follow suit, and certainly not to the tune of 1.5%. None of the banks will look at the huge numbers in arrears or negative equity, so that just leaves new applicants who I presume are shopping around or those with equity stakes who likewise could shop around, but generally don't do so. The numbers switching mortgages has historically been low, partially down to the red tape and costs involved. 

If they all dropped by 1.5%, you can be sure charges would go up to balance the books. Then a larger percentage of the population end ups paying for those on SVR mortgages.


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## TarfHead (14 May 2015)

Gerry Canning said:


> If AIB reduce rates by 1.5% on their SVR , as sure as night follows day the rest will follow ..



You assert that as a fact, but it is not backed up by evidence.  In my recollection, competitor banks closely watch each other for rate increases, less so for decreases.  If we accept that SVR rates are where they are to offset losses on trackers, then why would BOI, or any other lender, choose to reduce net profit / increase net loss from mortgages ?[/QUOTE]



Gerry Canning said:


> 1. Svr mortgages from all banks reduce ,that is a state wide benefit



Reducing rates on AIB SVR mortgages benefits SVR mortgage holders only.  It doesn't benefit;
- me, as I am neither an AIB customer, nor a SVR mortgage holder
- mortgage holders from any other lender
- AIB mortage holders on other rate schemes
- people who don't have mortgages


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## Gerry Canning (15 May 2015)

Tarfhead.

If AIB reduce rates other Banks will follow , it has always been thus.
Particularly in future it would mean new SVRs would be at a lower rate . 1% on 300,000 over 25 years is a huge ongoing saving to state/citizen.
Even on other rates AIB could tweek things to keep rates at a competitively lower rate . Again each 1% saved on car loans frees money to stay in our economy.

My main point is that by keeping AIB we should ensure Rates stay reasonable with ALL lenders.

1. Mortgages .
2. Loans.
3. HP .
4. Commercial .

On even 10,000 per year @ 4%
Versus 10000 per year @ 3% , saves the Joe Soaps e100 and that money stays in Ireland.
....................................................................................................................................
Correct if you are not an AIB or SVR holder = no direct benefit.
Incorrect, I have no doubt other lenders must follow.
Other AIB schemes , presume fixed rates can be refixed once term ends.
This will filter down to ordinary loans.
The biggest loser may well be depositors.
..........................................................  


.......................................................................................................................................,


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## Leo (15 May 2015)

AIBs 2014 profits didn't even come close to covering the loss the in 2013, let alone the years preceding that, same with most other lenders.

While dropping rates sounds great for the ~158k it affects, someone else is going to have to pick up that shortfall. Who do you suggest should pay?


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## TarfHead (15 May 2015)

Gerry Canning said:


> If AIB reduce rates other Banks will follow , it has always been thus.



You've used a different form of words to re-state the same assertion.

You may have "_no doubt that other lenders must follow_" but that does not make it true.  Why should another lender choose to follow such an action ?  Switching from one mortgage lender to another involves up-front costs (i.e. legal), which would dissuade some or many.  If you're in negative equity, AIB aren't going to give you a mortgage to pay off your mortgage with your current lender.

Also, the Government have not used their ownership of AIB to influence commercial decisions that affect some AIB customers. Why would they do so now ?


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## Gerry Canning (15 May 2015)

TarfHead,

Let me then put things another way.

If state sells AIB ,there will be no brake on stopping all Banks charging an extra .25% here and there.
With AIB the drag of public ownership will slow down their wish to raise rates on all lending products , as night follows day that means slightly lower rates for Joe Public..

If future lending charges say .25% less over every loan into the economy ,it will save Joe Soaps a lot over time.
...........................................................................................................................................

(no doubt other lenders must follow) . I hold to that proposition.There are few businesses that do not follow the competitors, eventually some fall down and no harm done.With Banks they are too big to fail and too costly to fix again!
Banks chase market share , they price to market, eg if AIB see to little exposure to Agri they will drop rates to get their share.If they have too much consumer lending they will raise rates.
The problem was in the fluffy times most banks choose {Volume for vanity V Profit for sanity} I would fear Banks don,t learn and won,t learn.
I just hope our Central Bank has learned how to check them?
.........................................................................................
I would not want Government to influence AIB on Commercial decisions , I would want them to keep an overview on them, as any shareholder should.


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## Gerry Canning (20 Aug 2015)

I see that in State Ownership AIB have for the 2nd time made a reduction in SVR,s (standard rate mortgages).
I see that in State Ownershio AIB are making a belated recompense on CCP miss-selling.

It appears that in State Ownership AIB are making a faie stab at sorting Mortgages.

Damn it lads , lets sell it to the market and increase rates!


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## Gerry Canning (9 Nov 2015)

I hear trumpets sounding  that our Brave Government are to get funds from saved AIB.
Looks like by mid 2016 we will get 4 Billion of the 20 Billion we put in.
Our brave 2nd in command says the 4 billion will come off my debt?

How nice .
If AIB sell for say 30 Billion and I get 10 Billion to build social housing etc then I applaud.

If AIB sell just to clear my debt ,then I object .
I insist I hold AIB  or get a huge profit for the Punt I took {you took the Punt as well}


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## Gerry Canning (18 Nov 2015)

I see Brendan has a thread on {noonan says AIB shares overvalued} and from thread they look seriously way overvalued.
Yet people are still taking a punt on buying them ?= madness. 
I can,t get my head around this , have we learned very little?


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