Minister for Finance Paschal Donohoe has announced that the Government will sell part of the State's 13.9% shareholding in Bank of Ireland over the next six months.

This marks the first sale of some of the Government's holdings in the country's banks since 2017.

Bank of Ireland's shares were lower in Dublin trade today.

The sale will occur through a pre-arranged trading plan that will be managed by Citigroup Global Markets.

Citi were appointed to the role from the Department of Finance's Panel of Financial Advisors following a mini-tender competition and have been mandated to effect "a measured and orderly sell down of shares".

In order to ensure that the taxpayers' interest is protected, shares will not be sold below a certain price per share which the Department of Finance will keep under review.

The number of shares sold will depend on market conditions, amongst other factors, a statement from the Department of Finance said.

"Today's announcement marks the start of a phased exit from the state's remaining investment in Bank of Ireland," Finance Minister Paschal Donohoe said.

"When all cashflows are taken into account the taxpayer has already recorded a surplus on its investment in and support for the bank, even before the sales of these shares are accounted for," Mr Donohe said.

"A trading plan enables the state to sell down its shares in a low cost carefully controlled manner while avoiding the need to try to time our disposals with market conditions," he added.

We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences

Bank of Ireland group chief executive Francesca McDonagh welcomed today's announcement, adding that it was "a positive step - for Irish taxpayers, the Irish economy, and Bank of Ireland".

Ms McDonagh said that state investment in Bank of Ireland over a decade ago should never have been needed, but the bank will always be grateful for the support it received.

"We repaid the taxpayer by 2013, and again thank the State and Irish taxpayer for their extraordinary support," the bank's CEO said.

Bank of Ireland CEO Francesca McDonagh

"Today's announcement commences a process which will add to the returns already received, and also marks an important moment in normalising the relationship between the Irish State and Bank of Ireland," she added.

The Department of Finance said that updates on the state's Bank of Ireland shareholding will be disclosed to the market, each time the shareholding falls through a percentage point threshold as is required by Stock Exchange and investment regulations.

The Minister said he can not disclose any further details in relation to the plan as it would be detrimental to maximising value for the taxpayer.

The number of shares sold, the average price achieved and the cash generated from the plan will be known once it has been completed.

The trading plan will become operational in the coming days and will terminate no later than six months later, but can be renewed at the Minister's discretion, the Department of Finance said.

The British government sold down its remaining 24.9% stake in Lloyds Bank from 2014 to 2016 in a similar process.

Minister for Finance Paschal Donohoe has said the Government's decision to sell some of the shares it owns in Bank of Ireland is based on its confidence in the economy to recover from the pandemic.

We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences

Speaking on Morning Ireland, Paschal Donohoe said that Irish companies and banks "are going to benefit across the coming period and now is the right time to indicate a willingness to sell" some of the bank's shares.

Mr Donohoe said he anticipates that the Government will continue to be a shareholder in the bank at the end of the six month period.

He said the Government's long-standing policy is that over time it would steadily reduce its shareholding and remove itself entirely from the bank sector in the medium term.

Paschal Donohoe said the focus now is what needs to be achieved over the next six months - reducing the Government's shareholding and generating additional cash for the tax payer.

The Finance Minister said the Government will consider its shares in AIB and Permanent TSB at "the right point in time".

Mr Donohoe said that he does not control or influence decisions in relation to mortgage lending or commercial affairs, and selling shares will have no effect on this.

The safest place for Ireland to be is to completely break the link between the sustainability of the banking sector and its finances, and the country's finances, he said.

Today's news is a further step in that journey, he added.

He also said it is still possible that the state could make a profit through the sale of its holdings in the Irish banks that are still trading but it will depend on how long a period it is prepared to wait to offload the stakes.

Paschal Donohoe's predecessor, Michael Noonan, predicted in 2017 that the Government would recoup more than the €29.4 billion it used to rescue in Bank of Ireland, AIB and Permanent TSB.

Sinn Féin finance spokesman Pearse Doherty

Sinn Féin's finance spokesman Pearse Doherty has expressed serious concern about the Government's move to share some of its shareholding in Bank of Ireland saying the timing may not deliver 'value for money' for the taxpayer.

Deputy Doherty told the News at One that share prices in Bank of Ireland are 'significantly suppressed' compared to four years ago, falling from €1.1 billion in 2017 to approximately €650m.

He said "there is a a serious question as to why the minister has decided the time is right" when he did not choose to sell four years ago.

He said that it is a "huge gamble that could costs the taxpayer up to half a billion euro" and added that there is "no need" for this announcement to happen at this time.

Deputy Doherty said the bank's share price is expected to rise as the economy continues to recover continues post- pandemic but "not sufficiently for there to be a benefit for the taxpayers".

Deputy Doherty said there is a role for the state to continue to be the majority shareholder in AIB, especially given the significant changes in the banking landscape so it can maintain influence in relation to lending into economy to meet strategic aims of government.

He said "we have carried the can ..and people have felt the burden ..and now that the bank is profitable and paying dividends again, it is important we have a retaining shareholding in AIB".

Bank of Ireland received €4.7 billion from State during financial crisis

In total, the State put €4.7 billion into Bank of Ireland with the initial investment coming in early 2009 as the banking crisis took hold.

That year the then Minister for Finance told the National Pension Reserve Fund (NPRF) to inject €3.5 billion into preference shares issued by the bank.

The following year, the State then converted €1.7 billion of this investment into ordinary shares and, in 2011, invested another €200m in equity, again via the National Pension Reserve Fund.

A further €1 billion was invested in July 2011 through Contingent Capital Notes.

Since then Bank of Ireland has returned around €6 billion to the State. This makes it the only Irish bank to have repaid the Irish taxpayer for its support.

By May of last year the State had generated a net positive cash return of at least €1.2 billion from its investment in Bank of Ireland.

The State's equity stake in Bank of Ireland has a current market value of about €670m based its market capitalisation of around €4.8 billion.

Bank of Ireland is currently in talks with KBC Bank Ireland about acquiring its performing loan portfolio.

The bank is also reported to still be in the hunt for Davy Stockbrokers which is currently for sale.

Ireland last recouped part of the money it ploughed into its lenders when it cut its holding in AIB to 71% from 99.9% with a 2017 IPO. It also owns 75% of Permanent TSB.

Of the €29.4 billion put into the banks still trading, €19.2 billion has been recovered by way of disposals, investment income and liability guarantee fees.

The remaining shareholdings are currently valued at €5.3 billion.

Bank of Ireland's shares are up 31% so far this year but 45% lower than they were in 2018, before a Europe-wide slump in bank shares.

FSU queries timing of Bank of Ireland stake sale

The Financial Services Union has queried the timing of the Minister for Finance's decision to sell some or all the state shareholding in Bank of Ireland.

The General Secretary of the Financial Services Union, John O'Connell, said that both the Minister for Finance and the Taoiseach have in the last few weeks commented on the need for a review of banking in Ireland.

"Change is taking place in the sector at a rapid pace and there is common agreement that a strategic discussion needs to happen involving all stakeholders on the future of banking in Ireland. The sale of the state shareholding in Bank of Ireland should have been part of that discussion and not taken prior to that review taking place," Mr O'Connell said.

He noted that the Central Bank Governor was clear in recent comments that banks needed to play their part in supporting SMEs as we reopen society after the Covid-19 pandemic.

"To weaken the Government's influence in Bank of Ireland at this important stage of our economic recovery needs a wider explanation for stakeholders," he stated.

The FSU is requesting a meeting with the Minister for Finance looking for his rationale for the decision.

The union said it will also remind the Minister that staff and customers are important stakeholders and have made a significant contribution to the banks' turnaround and should be involved in the decision-making process, Mr O'Connell added.