Not just banks: State now a big player on stock exchange

Finance Minister Paschal Donohoe has overseen an increase in State influence over the banking sector. Photo: Yves Herman/Reuters

Jon Ihle and Ellie Donnelly

April 22 2021 02:30 AM

The stock market used to be where governments went to sell off the likes of Aer Lingus and Eircom. Now the State is a big and active owner of all kinds of everything from pharma investment to renewable energy.

Following the privatisations of the 1990s the Irish government only became a big investor by accident, by bailing out the banks. The idea was always to sell off the bank shares too, but it hasn't gone to plan.

Now the climate has shifted and the lines between public and private have blurred.

Its a strange quirk of language that publicly-listed companies, by and large are owned by private investors.

The public part is not about public ownership, it’s about listing on a public market where prices and information are regularly published and publicly ‘quoted’.

Public definitely doesn’t mean the State, unless it does.

While it’s not unusual for governments to be diversified investors in stocks and bonds via sovereign wealth funds, the Irish State is somewhat unusual in having highly concentrated holdings in its domestic market.

Through the Irish Strategic Investment Fund (ISIF), Finance Minister Paschal Donohoe controls much of the domestic banking sector via a 71pc stake in AIB, a 75pc stake in PTSB and a 14pc stake in Bank of Ireland.

Over the last decade the State has recouped more than €40bn of the €64bn outlay to save the banks, in the form of dividends, coupon payments, fees and share sell downs.

The remaining bank stakes are valued at around €5bn. .

ISIF has branched out since the bailouts. It has a 4.8pc stake in wind energy investor Greencoat, even after selling €50m of shares in October.

ISIF is also a 10.88pc backer of pharma investor Malin, which has promised cash distributions this year as some of its bets have paid off.