# AIB paying no tax



## TheBigShort (28 Sep 2017)

[Moved from a thread suggesting that social welfare payments should be cut]
Looks like they are not being cut again anytime soon

http://m.independent.ie/irish-news/...ldnt-live-on-198-welfare-a-week-36176649.html

Of course lefties and the socialists will be to blame despite the fact that they are not the ones in power making the decisions.
The only conclusion then is to consider is that the broad political spectrum across the country has gone left?

Until of course, you read this. Social welfare for multi-million Euro corporate stockholders.

http://www.irishexaminer.com/breaki...-corporation-tax-for-20-years-ceo-807486.html

Please stop whinging about the woman with 5 kids, one with cerebral palsy. Please stop whinging about people who have lost their jobs, their homes and are placed on social housing waiting lists.
Wake up to the pilfering of economic wealth. It's trickle-up economics. It is collapsing in upon itself. It is not the fault of the poor or the needy.


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## qwerty5 (28 Sep 2017)

TheBigShort said:


> Until of course, you read this. Social welfare for multi-million Euro corporate stockholders.
> 
> http://www.irishexaminer.com/breaki...-corporation-tax-for-20-years-ceo-807486.html



I'm not sure I disagree with this kind of policy. Suppose I lose 10 million this year then next year if I make 5 million I'm still at -5 million. Do you think I should be paying tax on a minus number just because it's a positive number over this year?
What's the alternative?


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## TheBigShort (28 Sep 2017)

qwerty5 said:


> I'm not sure I disagree with this kind of policy. Suppose I lose 10 million this year then next year if I make 5 million I'm still at -5 million. Do you think I should be paying tax on a minus number just because it's a positive number over this year?
> What's the alternative?



The rules are clear in terms of offsetting losses in a financial year against profits made in another year.
What's happened here is that AIB has secured a tax advantage over the next twenty years. We have sold 25% of that advantage to the highest bidder, typically corporate investors.
In real terms, if there wasn't an opportunity to exploit this advantage it wouldn't have been bought into.


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## Sarenco (28 Sep 2017)

TheBigShort said:


> The rules are clear in terms of offsetting losses in a financial year against profits made in another year.


What's the problem so?  

Are you suggesting that AIB has gained some advantage that another company would not benefit from in precisely the same circumstances?

The recent public offering of AIB stock by the State was generally considered a huge success for the taxpayer.


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## TheBigShort (28 Sep 2017)

Moderator said:


> Moved from a thread suggesting that social welfare payments should be cut]



The OP is mine, but the thread is not. I was invited to edit the title of the thread by the moderator as I wished. I've done that now.
The moderator is requested to take my username of the thread owner.
Thks TBS


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## Gordon Gekko (28 Sep 2017)

They made an actual economic loss and the rules allow companies to carry forward such losses and offset them against economic gains.

Any restriction on the above impacts on the bank's capital position as it loses the deferred tax asset that those losses represent. The State is then compelled to step in and shore up the capital position (circa €3bn).

Moaning about AIB not paying corporation tax for the forseable future is lowest common denominator stuff to be frank.


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## TheBigShort (28 Sep 2017)

Sarenco said:


> What's the problem so?



Assuming a €1bn profit a year for next 20yrs.
Taxed at 12.5%. With 99.99% shareholding, the State, which bailed out the bank with your and mine taxes would ordinarily receive;

€875m profit + €125m tax routed through Revenue = €1bn.
But due to this special treatment, the €1bn profit would simply be collected.

Now, with 25% sold off. Ordinarily, woithout this special treatment we would receive, following a €656m profit + €93,750m CT at 12.5%.
Additionally, the 25% shareholding, ordinarily being subject to corporate tax would yield a further €250m x 12.5% = €31.25m a year.

That €31.25m (based on €1bn profit) a year is lost to private financiers who have been afforded another handout.


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## blured (28 Sep 2017)

http://www.thejournal.ie/aib-sale-e3-billion-raised-3459358-Jun2017/

The State made €3.4bn on the sale of the 25% of AIB. That means that at your figure of €1bn a year profit, it would take the State over 13 and a half years to get this back if they hadn't sold (€250m a year). With or without the tax treatment


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## TheBigShort (28 Sep 2017)

blured said:


> http://www.thejournal.ie/aib-sale-e3-billion-raised-3459358-Jun2017/
> 
> The State made €3.4bn on the sale of the 25% of AIB. That means that at your figure of €1bn a year profit, it would take the State over 13 and a half years to get this back if they hadn't sold (€250m a year). With or without the tax treatment



According to the report that you linked, the State put €21bn into AIB to bail it out. As far as I know some €7bn has been paid back by the bank, leaving a €14bn deficit. 25% of that is €3.5bn. We sold it for €3.4bn. 

Regardless of the sale, the point is AIB  secured a tax position with the State that it is estimated, no tax on profits will be paid for 20yrs. It's a nice position for AIB to be in. We just sold 25% of that position ( for no real gain considering what we put into it) to private financiers for them to benefit from that position.
I estimate (based on a €1bn profit a year) to be €31m a year handout.


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## Sarenco (28 Sep 2017)

TheBigShort said:


> Assuming a €1bn profit a year for next 20yrs.
> Taxed at 12.5%. With 99.99% shareholding, the State, which bailed out the bank with your and mine taxes would ordinarily receive;
> 
> €875m profit + €125m tax routed through Revenue = €1bn.
> But due to this special treatment, the €1bn profit would simply be collected.


BS

AIB won't pay corporation tax for many years to come because of its large deferred tax asset (losses carried forward).  Nothing to do with the ownership of AIB and nothing to do with any "special treatment". 

Your "calculation" is, frankly, nonsense.

By the time AIB is fully re-privatised it is highly likely that the State will have recouped the full amount invested in AIB.


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## TheBigShort (28 Sep 2017)

Sarenco said:


> AIB won't pay corporation tax for many years to come because of its large deferred tax asset (losses carried forward).



Yes, that is outlined in the article.



Sarenco said:


> Nothing to do with the ownership of AIB and nothing to do with any "special treatment".



Fair point, "special treatment" was wrong choice of words. 
As far as ownership is concerned, it is up to the owners (the State) to sell it to whoever they want to. I can then decide if I think it is a bad deal or a good deal.
In this instance, I believe it is an excellent deal for the buyers, as profits won't be subject to corporate tax on profits for a long time as a consequence of losses carried forward.
Those losses were absorbed by Irish taxpayers. Those losses now carried forward on future profits will result in zero corporate  tax liability.
This is a bonus for shareholders who didn't contribute to the bailout through our taxes, but can now avail of benefits of losses carried forward.



Sarenco said:


> Your "calculation" is, frankly, nonsense.



Simplistic yes, nonsense no. Tax payers are at a loss once again. It is a wealth transfer from Irish public finances to private corporate financiers.



Sarenco said:


> By the time AIB is fully re-privatised it is highly likely that the State will have recouped the full amount invested in AIB.



If it is that profitable, and if the State is the shareholder why privatise it? Why hand it over to the speculators and gamblers once again?


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## Sarenco (28 Sep 2017)

TheBigShort said:


> I believe it is an excellent deal for the buyers, as profits won't be subject to corporate tax on profits for a long time as a consequence of losses carried forward.


Do you really think this valuable asset would have been ignored by the State's advisors when pricing the stock?  Really?! 


TheBigShort said:


> Simplistic yes, nonsense no.


No BS, it is nonsense.  You obviously don't understand basic accounting.


TheBigShort said:


> Tax payers are at a loss once again


No BS, they're not.  The losses have already been incurred by AIB - hence the deferred tax asset.


TheBigShort said:


> It is a wealth transfer from Irish public finances to private corporate financiers.


No BS, it isn't.  The public sale of AIB shares generated cash for the State that was used to pay down debt.


TheBigShort said:


> If it is that profitable, and if the State is the shareholder why privatise it?


Why privatise the largest bank in the State?  Because the overwhelming majority of people don't want to live in a country where the State controls all capital. 


TheBigShort said:


> Why hand it over to the speculators and gamblers once again?


Do you consider all private stockholders to be "gamblers and speculators"?  Silly question - of course you do.  Such a thing simply wouldn't exist in your communist utopia.


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## TheBigShort (28 Sep 2017)

Sarenco said:


> Do you really think this valuable asset would have been ignored by the State's advisors when pricing the stock? Really?!



Of course not, it is stated in the article. The rules were changed to facilitate the bank being able to class the loss of some €3 bn as a deferred tax asset.
The point is the bank has secured a favourable position with the treatment of this €3 bn. All legal and above board.
Here is a chance to utilise that favourable position (0% CT rate on profits that would ordinarily attract 12.5% tax rate for liabilities up to €3 bn).
Having secured a favourable tax position on these profits, the State has decided to sell that position instead of utilising it to the max.



Sarenco said:


> Do you consider all private stockholders to be "gamblers and speculators"? Silly question - of course you do. Such a thing simply wouldn't exist in your communist utopia.



I am both a gambler and a speculator, just not with other people's money.


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## Sarenco (28 Sep 2017)

TheBigShort said:


> Having secured a favourable tax position on these profits, the State has decided to sell that position instead of utilising it to the max.



How exactly do you think that the State could have maximised the fact that AIB will not have to pay corporation taxes to the State for years to come without disposing of its holdings in AIB?

Think about it for a second BS.


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## Firefly (28 Sep 2017)

Sarenco said:


> No BS, it is nonsense.  You obviously don't understand basic accounting.


Nor economics.. quite the handicap on a financial site like this..


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## TheBigShort (28 Sep 2017)

Sarenco said:


> How exactly do you think that the State could have maximised the fact that AIB will not have to pay corporation taxes to the State for years to come without disposing of its holdings in AIB?



There is €3 bn of losses classed as deferred tax asset. Yes? No?
The State before the sale of shares had 99.9% of shares of AIB. Yes? No?
So if AIB made a profit of say €1 bn, the State effectively, as the 99.9% sharueholder Ieffectively has control of all of that. Yes? No?
Ordinarily, such a profit would be subject to 12.5% corporate tax. Yes? No?
In other words €125m. Yes? No?
So AIB realise an after tax profit of €825m (controlled by the State). Yes? No?
The Revenue (controlled by the State) collect €125m. Yes? No?
The combined total is €1bn in the control of the State. Yes? No?
But because of the deferred tax asset, the applicable rate this year is 0%. Yes? No?
In which case AIB, and the State with its 99.9% stake, effectively realises the €1 bn as profit - no need to bother the guys down at Revenue.
A €1bn return to the State with or without the deferred tax asset. Yes? No?

On the other hand, the State sells a 25% share of AIB for what it values it to be, roughly €3.4 bn. No problem there.

But now, when it comes to calculating the tax liability of €1 bn, only €750 bn is controlled by the State. Yes? No?
The other €250 bn is profit for private investors. Yes? No?
These profits, ordinarily would be subject to 12.5% tax, Yes? No?
In which case the private investors would ordinarily trump up €31,250,000m. Yes? No?
But because of the deferred tax asset, the applicable rate this year is 0%. Yes? No?
So no need to bother guys down at Revenue? Yes? No?
So the State now gets a €750m share of profits and the private investors gets €250m with no tax liability courtesy of their entitlement of the deferred tax asset. Yes? No?
A total return to the State of €750m instead of €750m + €_31,250,000_ tax collected from private investors. Yes? No?

In return the State has sold a 25% share for €3.4bn, at value which includes, as you quite right pointed out, this valuable deferred tax asset.
On the other hand, the State could have deferred the sale of the shares (foregoing the €3.4 bn for now) and instead utilised the deferred tax asset until it was exhausted. The AIB  CEO estimates this to be 20yrs. In reality that is pure speculation, and in fact it take longer than that to utilise the deferred tax asset, or it could also be a lot quicker than that.
Either way the option to utilise the asset for its 0% CT has now been diminished.
Instead it could have been utilised to the max for the benefit of the Irish taxpayer _then _the State could commence offloading its shareholding at the prevailing market value at the time.
This could of course be risky as who knows what the prevailing market rate will be?
But considering that the deferred tax asset will only be fully utilised if the bank is profitable, and considering all the efforts to date to keep this bank afloat, one would have to assume that those who are managing it believe it has a future, and that the future is profitable. Therefore I think, selling off shares now, with a lucrative tax saving vehicle such as the deferred tax asset is a transfer of wealth from the Irish taxpayer to the private investor.


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## TheBigShort (28 Sep 2017)

Firefly said:


> Nor economics.. quite the handicap on a financial site like this..



Ah, comrade Firefly, you must enlighten me with your views on that 'superb!' article in the Daily Mail a few days back.


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## Sarenco (28 Sep 2017)

TheBigShort said:


> On the other hand, the State could have deferred the sale of the shares (foregoing the €3.4 bn for now) and instead utilised the deferred tax asset until it was exhausted.



BS

If you can explain how the State could utilise a tax deferred asset to its advantage, I promise to try and answer your (frankly ridiculous) questionnaire.

I assume you understand that a pro-rata element of the value of the tax deferred asset would have been reflected in the price paid for the shares in the public offering?  Right?

Thanks.


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## TheBigShort (28 Sep 2017)

TheBigShort said:


> the State has sold a 25% share for €3.4bn, at value _which includes, as you quite right pointed out, this valuable deferred tax asset._





Sarenco said:


> I assume you understand that a pro-rata element of the value of the tax deferred asset would have been reflected in the price paid for the shares in the public offering? Right?



Yes, as already acknowledged above.
I'm sorry you think the questionnaire is ridiculous but I tried to keep the questions as simple as possible as you are not able to see how this valuable asset (which no doubt attracted a higher share than would have ordinarily be got without it) could have been used instead for the benefit of the Irish taxpayer.
With a 100% ( let's not quibble about the 0.01% holding for now), the State has an attractive holding in the bank insofar as the bank has secured a deferred tax asset of €3bn. All legal and above board.
Compare that to a bank in an identical position to AIB, 100% state owned but that _doesn't_ have the deferred tax asset. Instead, it's profits of €1 bn will be taxed at 12.5% with no tax deferred asset to write the tax liability down. Right? But because both banks are 100% state owned, it's neither here nor there. Both banks profits and subsequent tax liabilities are 100% controlled by the State.
Now sell 25% of each bank. Clearly the bank with the tax deferred asset will attract a higher price. This is great for one off capital payments and debt write downs.
However, over the next 20yrs, assuming both banks perform exactly the same every year growing say 3% average, there will be a difference in the level of tax payable by each bank.
The private investors who bought into the cheaper bank (without the tax deferred asset) will have their profits subject to 12.5% won't they?
The investors in AIB won't. This is a deficit to the public finances to the benefit of private investors. If both banks re-invest their after tax profits back into the bank, AIB will be committing 100% of profits (or €1bn this year), the bank that is subject to 12.5% will only re-invest (€875m).
Considering those facts by themselves, which share price do you think would rise most over twenty years?
And I should add that is why we should have held on to 100% of AIB because in twenty years time its value will be a lot higher on foot of the deferred tax asset.


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## Sarenco (28 Sep 2017)

BS

A tax deferred asset is a valuable asset in the hands of the tax payer - not the tax collector.

You seem to be suggesting that the State should have retained its shareholding in AIB until the value of the tax deferred asset was reduced to zero.

Cunning plan. 

As cunning as a fox that has just been appointed Professor of Cunning at Oxford University.

Hang on!  Won't that just cause a corresponding reduction in the value that could be realised on the sale  of those shares? 

Drat.


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## TheBigShort (28 Sep 2017)

Sarenco said:


> A tax deferred asset is a valuable asset in the hands of the tax payer - not the tax collector.



Whoo!hoo! Now you are getting it. With a 100% shareholding, the State has 100% of a valuable asset in its hands for the next 20yrs.
With a 75% holding, it can only utilise 75% of that asset on behalf of irish taxpayer. The other 25% is utilised by corporate investors.



Sarenco said:


> You seem to be suggesting that the State should have retained its shareholding in AIB until the value of the tax deferred asset was reduced to zero.



Yes, that is the idea. 



Sarenco said:


> Hang on! Won't that just cause a corresponding reduction in the value that could be realised on the sale of those shares?



That depends how the benefits of the asset are managed. 
Sure, if the government sold earlier in the year without the tax deferred asset, then the share price would have sold significantly less than €4.40 a share. 
But if the bank re-invests the benefits (usually there is a benefit to holding an asset, hence the term asset) of the asset back into the bank then it's share price will increase.
And in twenty years time, with all those profits, benefiting from the tax asset, who knows, maybe the bank will be worth more than €4.40 a share. Allowing for de/inflation, who knows the bank could be worth considerably more than it is today (€5.06 at close today, and why not, with that tax deferred asset up for grabs, who wouldn't want a piece over the next twenty years?).


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## Sarenco (28 Sep 2017)

TheBigShort said:


> Whoo!hoo! Now you are getting it. With a 100% shareholding, the State has 100% of a valuable asset in its hands for the next 20yrs.



BS 

A tax deferred asset is of no value in the hands of the State (the tax collector).

Can't you see that? 

The rest of your post suggests that you are missing this very obvious point.


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## Gordon Gekko (28 Sep 2017)

Gordon Gekko said:


> They made an actual economic loss and the rules allow companies to carry forward such losses and offset them against economic gains.
> 
> Any restriction on the above impacts on the bank's capital position as it loses the deferred tax asset that those losses represent. The State is then compelled to step in and shore up the capital position (circa €3bn).
> 
> Moaning about AIB not paying corporation tax for the forseable future is lowest common denominator stuff to be frank.



TheBigShort,

The above is not the first time that you've asked me a question, I've answered it, and you've ignored the response because it blew your argument out of the water.

Now you seem to be pushing this idea that the market didn't know about the deferred tax asset and that it wasn't built into the price that the State sold some of its shareholding at.

There is no preferential treatment here; if Gekko Ltd loses its shirt selling widgets, those losses become a deferred tax asset. Trying to restrict the banks' losses was unfair and actually imposed greater obligations on the State in terms of shoring up the banks' capital positions.


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## TheBigShort (28 Sep 2017)

Sarenco said:


> A tax deferred asset is of no value in the hands of the State (the tax collector).
> 
> Can't you see that?
> 
> The rest of your post suggests that you are missing this very obvious point.



Absolutely I can see that.
But you seem to be missing a an important part of the equation


Sarenco said:


> A tax deferred asset is a valuable asset in the hands of the tax payer -



That is that the State is sitting on both sides of this equation, as the tax collector and the taxpayer (by virtue of its 100% holding of AIB). 
By reducing that holding, the value of the asset holding is reduced. It is transferred to private ownership which now utilises the asset.
Put another way, imagine if the State sold 100% of AIB for €12bn or so and today it was revealed that no CT would be paid for 20yrs to liabilities valued to €3bn? 
In effect it would be considered, rightly in my view, as a transfer of wealth from the State to private investors.
While getting paid €12bn plus €7 already paid, that falls €2bn short of the €21bn for the bailout. 
If AIB, having secured a favourable tax position with €3bn deferred tax asset, and being 100% in the private sector. Then the State would lose out on those potential revenues on foot of AIB securing that deferred tax asset. 
In other words what was the point of securing that €3bn if it is of no advantage for the State to hold it (75% holding today).

We will have to agree to disagree. My view that this decision was mostly out of political expediency following an ideological view that the State should not be involved in private (and profitable) banking affairs.

The deferred tax asset will be utilised quicker than 20yrs as the State unwinds its position.


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## TheBigShort (28 Sep 2017)

Gordon Gekko said:


> The above is not the first time that you've asked me a question, I've answered it, and you've ignored the response because it blew your argument out of the



1.What question did I ask you?
2. I do my best to answer all questions put to me, unlike a lot around here.
3. Seeing as I don't know what question I asked you, I can't confirm if you have 'blown me out of the water'!




Gordon Gekko said:


> Now you seem to be pushing this idea that the market didn't know about the deferred tax asset and that it wasn't built into the price that the State sold some of its shareholding at.



No I am not. If you are going to butt in to the discussion please read the thread. Here is what I have said about the deferred tax asset and its relation to the share price




Gordon Gekko said:


> There is no preferential treatment here; i



I implied "special treatment" earlier, which I corrected as being wrong choice of words. I have been clear that all is legal and above board.
AIB secured a favourable tax position - legal and above board - with deferred tax asset. The State (was) a 100% stakeholder. The State should benefit from AIB availing of the benefits associated with that deferred tax asset. 
Instead we have sold 25% of our position in AIB, reducing our ability to exploit that position.


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## Sarenco (28 Sep 2017)

TheBigShort said:


> That is that the State is sitting on both sides of this equation, as the tax collector and the taxpayer (by virtue of its 100% holding of AIB).



BS

Exactly.  So a tax deferred asset is of no value to the State - on the one hand it does not recover tax that it would otherwise but on the other hand it does not suffer that same tax.  Surely you can see that?

If you cannot grasp the basic economics of the issue (which is bizarre to me - this is not complicated), it is very difficult to take any view you might have on this issue seriously.


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## Sarenco (29 Sep 2017)

TheBigShort said:


> Put another way, imagine if the State sold 100% of AIB for €12bn or so and today it was revealed that no CT would be paid for 20yrs to liabilities valued to €3bn?



But that wasn't the case! 

The extent of the losses that AIB was carrying forward was publicly available information at the time of the public offering.

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

No problem, just invent an alternative reality!


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## Gordon Gekko (29 Sep 2017)

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.


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## TheBigShort (29 Sep 2017)

TheBigShort said:


> In which case AIB, and the State with its 99.9% stake, effectively realises the €1 bn as profit - no need to bother the guys down at Revenue.
> A €1bn return to the State with or without the deferred tax asset. Yes? No?





Sarenco said:


> on the one hand it does not recover tax that it would otherwise but on the other hand it does not suffer that same tax. Surely you can see that?



I've already pointed that out to you. That as a 100% stakeholder, with or without the deferred tax asset, the outcome in realising profits and tax for the State is the same.

As a 75% stakeholder, there is a difference for the State in realising its profits and taxes.
Without the deferred tax asset, the State can now levy a tax on profits on the private investor.
With the deferred tax asset, those taxes on profits are lost to the private investor. Hence, the boost it gives to the share price. This is good for one off capital payments to pay down debt. Certainly is.
Alternatively, holding 100% share of a bank that has no tax liability, free to re-invest 100% profits in itself would boost the share price anyway. And after 20yrs, those benefits will dwarf the €3.4bn 25% share sale.

It really is a matter of choice, cash in now? Or hold for later?
My view is the government should have held. 
Time will tell.
Share price up 15% since sale of first tranche of shares. €4.40 is looking cheap in my view.


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## TheBigShort (29 Sep 2017)

Gordon Gekko said:


> People are blue in the face



Well get lost then, or better still answer the questions I asked you in the homeless threads. Or have you run away from them?

Btw, your last post is off track.


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## Gordon Gekko (29 Sep 2017)

TheBigShort said:


> Well get lost then, or better still answer the questions I asked you in the homeless threads. Or have you run away from them?
> 
> Btw, your last post is off track.



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

Tough though, especially in the face of utter claptrap.

I can't wait for your "is the Moon made of cheese" thread...


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## TheBigShort (29 Sep 2017)

Gordon Gekko said:


> No, I just try to live by the "don't feed the trolls" motto.
> 
> Tough though, especially in the face of utter claptrap.
> 
> I can't wait for your "is the Moon made of cheese" thread...



Go back and tell me again how you had to work 9 months before you were entitled to anything on the dole and how unfair it was for you and your tax bill, relative to women who have children with cerebral palsy living in a two bed house.
Poor Gordon, how did you cope? It's just so unfair...boo!hoo!


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## Gordon Gekko (29 Sep 2017)

I have never posted anything about the dole or a nine month time horizon.

I think you are mixing me up with someone else.


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## TheBigShort (29 Sep 2017)

Gordon Gekko said:


> I have never posted anything about the dole or a nine month time horizon.
> 
> I think you are mixing me up with someone else.



Fair enough, I'm mixing you with someone else. Lost the cool there also, sorry about that.

But it is ridiculous to be accused of not answering questions when you haven't actually asked me one in this topic! 
It really does waste time.


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## TheBigShort (29 Sep 2017)

Sarenco said:


> But that wasn't the case!
> 
> The extent of the losses that AIB was carrying forward was publicly available information at the time of the public offering.



Yes they were, and anyone interested would know that. Certainly buyers and sellers. This being factored into the share price. 
Move on now.

The _implications _of the losses being carried forward would however, I gather, not be known to the general public at large. That is, in the view of the CEO, 20yrs without any tax liability.
Knowing this, and considering the policy of government to unwind its position in AIB then it is too early in my opinion.


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## Sarenco (29 Sep 2017)

TheBigShort said:


> The _implications _of the losses being carried forward would however, I gather, not be known to the general public at large. That is, in the view of the CEO, 20yrs without any tax liability.



BS

Are you seriously suggesting that somebody buying €10k worth of stock in a public company wouldn't understand the implications of the losses that were being carried forward?  Really?!

Even though the CEO of that company spelt it out for them?

Seriously BS.  Stop digging.


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## TheBigShort (29 Sep 2017)

Sarenco said:


> Are you seriously suggesting that somebody buying €10k worth of stock in a public company wouldn't understand the implications of the losses that were being carried forward? Really?!
> 
> Even though the CEO of that company spelt it out for them?



No, just me, the public accounts committee and the reporter at the Irish Examiner and his editor.
Don't be such a twit, when I spoke of general public, I was speaking in terms of their general understanding.
If you were / are a buyer of shares, of course you would know. If you weren't, like me, then I wasn't to know of this little sweeter.
Did you buy shares yourself?


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## Gordon Gekko (29 Sep 2017)

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.


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## TheBigShort (29 Sep 2017)

Gordon Gekko said:


> Tough though, especially in the face of utter claptrap.
> 
> I can't wait for your "is the Moon made of cheese" thread...





Gordon Gekko said:


> BigShort, stop hurling personal insults at other posters.



You couldn't make this stuff could you? 



Gordon Gekko said:


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



I understand what you and sarenco are saying (well, sarenco anyhow - I'm still perplexed at how you blurted in accusing me of not answering your question when you didn't actually ask one.)



Gordon Gekko said:


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



I would disagree. I think the blind spot lies with you. It is an opportunity lost (as a 100% stakeholder). 
As the State unwinds its position this will become increasingly clear. 
The proof will be in the pudding. The stock has risen 15% in two months. It has announced €800m+ profits, it has a tax deferred asset of €3bn on losses incurred. Do you think the government, the CEO, the financial advisors weren't aware of this? 
Of course they were, yet they sell the stock priced at a level that is clearly showing to be cheap.
The consequences of the bailout are people whinging about how much tax they have to pay, they blame the poor. Oblivious to the fact that 90% of stock sold was sold to corporate investors who can now drink the gravy on a cheap stock that is highly profitable and those profits are tax free.
If you can't see this, and support the government position to wind down the stock, then don't come crying or blaming the poor when it all goes pop again.


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## Purple (29 Sep 2017)

TheBigShort said:


> The proof will be in the pudding.


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



TheBigShort said:


> The consequences of the bailout are people whinging about how much tax they have to pay, they blame the poor.


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



TheBigShort said:


> Oblivious to the fact that 90% of stock sold was sold to corporate investors who can now drink the gravy on a cheap stock that is highly profitable and those profits are tax free.


 Nice soundbite but it doesn't mean anything.


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## Firefly (29 Sep 2017)

Sarenco said:


> Now I think I see your difficulty - reality just doesn't fit your agenda.
> 
> No problem, just invent an alternative reality!





Gordon Gekko said:


> 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.





Gordon Gekko said:


> 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.







Gordon Gekko said:


> 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.


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## TheBigShort (29 Sep 2017)

Purple said:


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



True indeed!



Purple said:


> 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.


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## TheBigShort (29 Sep 2017)

Firefly said:


> 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.


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## Purple (29 Sep 2017)

TheBigShort 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.


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?


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## Gordon Gekko (29 Sep 2017)

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.


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## TheBigShort (29 Sep 2017)

Purple said:


> 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.



Purple said:


> 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.



Purple said:


> 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.


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## Purple (29 Sep 2017)

TheBigShort said:


> 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.


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