
Rosita Sweetman: I was poor when the country was — being poor in a rich Ireland must be torture
Being 'poor' is miserable. Being poor in an affluent society is torture.
Ireland is now, statistically, one of the richest countries in the world - but child poverty, or children in consistent poverty, has increased by an astonishing 78% in the past year, according to a new report. And renting a house, never mind buying a house, for you and your children, has never been more difficult.
This week the Government serendipitously announced its plans for the housing market where rents on Daft show new build apartments in Dublin (seemingly made mostly of MDF) are €2,300 for a single bed, €3,500 for a double.
So what does our delightful new government do?
Sadly, far from beating their breasts, saying, our nation's children should not be in 'consistent poverty', our lovely young people should not be beggaring themselves to rent or buy a home, our old people should definitely not be forced to sell their homes and go into so-called 'homes' where they could be neglected or even unsafe, the Government plan to bring in legislation that will enable landlords to raise rents even higher.
They say it's the only way to increase supply.
In a way, it's not surprising.
We've been bastards to each other over property ever since the Famine, when Gombeenism, (ie taking over your dying or emigrating neighbour's gaff) signalled the birth of native capitalism. It's a tradition so ingrained that many of our politicians run side hustles as landlords.
Remember the Celtic Tiger, when Bertie and Co whipped the country into a frenzy of acquisition that everyone knew was going to end in a massive crash? And when the crash hit the property boys circled the wagons, bailed out the banks, created Nama.
Welfare was slashed. Supports for the vulnerable were slashed. Social and affordable builds came to a stop. Hospitals and schools had their budgets shaved to the bone. New entrants to teaching, nursing, the police, the civil service got salaries a fraction of their predecessors'. Housing regeneration projects in the most deprived areas were abandoned.
To top it all the 'poor' were openly derided. Remember a plush, well fed Leo Varadkar and his 'Welfare cheats cheat us all?' schtick? A slogan that whitewashed the reality: since the crash the wealthy have been increasing their take, worldwide. A 2024 Oxfam report showed that billionaire wealth increased by €13 billion in 2024, or €35.6 million per day. It's the dodgy ground on which our current crisis is built.
Poverty in the 90s
Going through papers and photograph albums recently for my memoir, ' Girl with a fork in a world of soup', I was struck over and again how poor my children and I were in the 90s when my marriage crashed.
We were lucky in one way, I'd managed to keep our home (despite vigorous attempts to ensure the opposite by my ex), we had a roof over our heads.
But with the charmingly named 'Deserted Wives Allowance' then IR£69 a week, heating the house was not possible. Mould marched the walls. Eating right was not possible either. We went from proper hot dinners to yellow pack pizzas. All our clothes came from charity shops. I had unpaid bills in every small supermarket for miles.
"Everything in this house is broken," said the son of one of the school mums who came to visit. She was mortified but he was right.
You think you live in a decent society, that there will be a safety net when you fall, but no. The children and I fell and fell through a whistling void. As we went down I sold paintings, rugs, desks, cabinets, more paintings. Anything I could lay my hands on to keep us afloat.
I went to the family lawyer to find he was now working for 'the other side', ie my ex. I went to Social Welfare who said they couldn't help since I was still 'technically' married.
I went to a GP who said I should take a holiday, away from the children; I seemed "very stressed". Through gritted teeth I explained I didn't have enough money to get to the end of the week, never mind go on holiday, never mind getting someone to mind the children who anyway were also deeply traumatised and would have suffered more if I'd left.
I went to the local priest. He almost tore his soutane in half, slamming the drawer of his desk, stuffed with cheque books and see-through envelopes bulging with rolls of notes.
Once a film company used the house as a location. When their cheque for IR£1,300 was read by our local bank as IR£3,300 I whooped. Money! When the bank took me to court their representative said: "She went to DID Electrical the next day and bought a new washing machine, and a fridge!" As if I'd blown their precious loot on heroin.
Thankfully that judge was just. The case was dismissed. For once, it wasn't Josephine Soap's fault. It was the bank's. For not reading the cheque properly. Hurray!
The Dublin housing market
When, after 17 years, the children and I were forced to leave our home for other reasons, we encountered the Wild West that is the Dublin rental market. Oh boy. The first home we got was a beauty but at €2,300 a month roared through the money my mum had left us. The next house - about one tenth the size of the first - was a former groom's habitat off South Circular Road.
Then it was an old Georgian off Leinster Road with cartoonishly avaricious landlords. When we asked permission to strip out an old and stinking carpet and paint the three flights of stairs white they agreed. Then they served notice. The place looked so lovely it was going back on the market the following week at twice the price.
The next landlord was an ex-garda. When he couldn't legally hike his rent he booted us on the grounds his daughter was moving in and charged us for 'cleaning' new curtains, bringing the pine table and the sofa we'd left behind to the dump. When I looked through the window a month later there were strangers, enjoying our stuff with nary a daughter to be seen. When I tried to take up the case with the PRTB - the Private Rental Tenancies Board, it went nowhere, and of course the PRTB replaces all recourse to the courts, so that was that.
Happy Gombeening.
Rosita Sweetman: 'When, after 17 years, the children and I were forced to leave our home for other reasons, we encountered the Wild West that is the Dublin rental market. Oh boy.'
Throughout our shenanigans I had the advantage of being educated. Of having a voice, however small. Imagine the despair trying to navigate this entanglement without those advantages?
Being poor is miserable. Being poor and at the mercy of landlords who've basically been given free rein is going to be terrifying for so many. Being the child of poor parents at the mercy of this system has got to be the worst of all.
Come on Irish government. We're rich. We have billionaires amongst us. We can do better than this, for everyone. Can't we?
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Irish Times
3 hours ago
- Irish Times
The Central Bank's hard-landing scenario: corporate tax crashes, budget deficit balloons to €18bn
For obvious reasons, officials in Ireland can't use the term 'soft landing'. It was trotted out so regularly, so erroneously in the late 2000s when the economy was hurtling towards the hardest of hard landings that it has become synonymous with the opposite. If the Central Bank told us the Irish economy was in for a 'soft landing' from the current US tariff debacle, people would panic. Perhaps in reaction to the misplaced optimism of the Celtic Tiger era, we now seem to have an inherent bias towards highlighting negative scenarios. READ MORE [ US tariffs could punch €18bn hole in public finances, Central Bank warns Opens in new window ] We were certainly prepared for a bigger assault from Brexit than the one we actually got. Some call it 'catastrophising', but regulators should take a sober view on things. In an article published alongside its latest quarterly bulletin, the Central Bank lays out three possible scenarios for how US tariffs and greater US protectionism might impact the economy here. In its baseline scenario, which involves 20 per cent tariffs on European Union goods going into the US from the third quarter of this year, with pharmaceuticals and semiconductors exempt, the economy grows by 2 per cent this year, in terms of modified domestic demand, and 2.1 per cent on average in 2026 and 2027, while the State continues to run a budget surplus out to 2030. Even if it won't say it, this is the regulator's 'soft landing' scenario. In a more adverse scenario with pharmaceuticals and semiconductors getting hit by 20 per cent tariffs and with the EU retaliating with 20 per cent tariffs of its own, growth is slower and the budget surplus shrinks to less than 1 per cent. But what grabbed the headlines was the Central Bank 'extreme scenario' which involves the State losing the entire windfall element of its corporate tax base, which is due to peak at €17 billion in 2026, alongside a 20 per cent reduction in multinational investment 'and a corresponding loss of export market share'. [ Rent pressure zone changes will be 'painful' for tenants, Central Bank warns Opens in new window ] This scenario would see the Government's healthy budget surplus – it was €8.9 billion last year – flip to a budget deficit of more than 4 per cent of national income by 2030, equivalent to €17.7 billion. While there are lots of caveats – the scenario assumes the Government takes no corrective action and continues to make contributions to the two long-term savings funds – such an outcome would pitch us back into another period of austerity. It also highlights how much the State's coffers have become intertwined with the financial fortunes of a small number of US multinationals. 'This could be considered a somewhat extreme scenario as it incorporates a loss of all excess CT [corporate tax] by 2030 along with weaker economic activity, but it is illustrative of a key vulnerability for Ireland relating to the future path of the foreign-owned capital stock,' it said. Central Bank director of economics and statistics Robert Kelly denied he was painting too bleak a picture, saying the bank's worst-case scenario did not envisage the possibility of a big multinational firm leaving the jurisdiction because of tariffs or changes to US tax law, which has been the fear since the corporate tax boom started more than a decade ago. The nightmare scenario for Ireland would be for an Apple or an Intel to up sticks and leave. Despite the threat hanging over Ireland's economic model, there are several reasons to believe that corporate tax receipts, which hit a record €28 billion last year (excluding the Apple tax money), will continue to increase in the medium term. For one, the biggest corporate taxpayers here are in the tech and pharmaceutical sectors, both at present exempt from US tariffs. The Irish Fiscal Advisory Council (IFAC) also expects receipts from the business tax to rise by about €5 billion from 2026 onwards as additional revenue from the new minimum tax rate of 15 per cent over and above the State's headline rate of 12.5 per cent flows into the Exchequer. Big multinationals with a turnover above €750 million have been liable to pay the higher rate since 2024, but are not due to make their initial payments under the new rate until the middle of next year. This is expected to boost tax receipts here by an additional €3 billion next year and €2 billion in 2027. Despite the US signalling its intention to withdraw from the Organisation for Economic Co-operation and Development (OECD) -brokered deal to establish a minimum global rate, tax authorities here and elsewhere are pushing ahead with it. Several big taxpayers here have been availing of generous tax-cutting capital allowances which are due to run out, meaning they will be liable to pay more tax – another factor likely to drive receipts. Some of the frothier predictions suggest corporate tax receipts here could grow to €40 billion and say we should be saving a lot more than the current allocations to the State's savings funds. The windfall has also coincided with a worrying increase in Government spending, over and above what IFAC deems sustainable. It might be that the bigger threats facing the Irish economy are coming from within – housing, government spending, energy security, the high cost of doing business – rather than those emanating from abroad.


Irish Times
3 hours ago
- Irish Times
How AIB, once worth less than its art collection, came back from the brink
In early March 2012, AIB's chief executive of three months, David Duffy , unveiled a swingeing plan to cut one in five jobs – 2,500 in total – to restore the ailing lender to profitability and make a start on paying back its €20.8 billion taxpayer rescue. 'If you were leaving, someone would bring out a Swiss roll and a packet of biscuits and people would gather around your desk. There was no talk of going out for a nice lunch,' recalls a former AIB staffer who went through their fair share of goodbyes at the time in the group's then headquarters in Ballsbridge . 'The contrast between the relief on the faces of those leaving and the anguish of those who were staying was often stark. It was a very difficult time to say you worked in one of the banks. If you got into a taxi at the time and were asked where you worked, you'd say something like Arnotts, given the level of public hostility towards bankers at the time. Others working in branches got the brunt of it, sometimes being spat at. The atmosphere was febrile.' Almost 13 years later – and 16 years after its initial rescue – AIB returned this week to full private ownership as the Government sold its final 2 per cent stake to market investors, at a share price almost 60 per cent above what it was when it carried out an initial public offering (IPO) of shares on the stock market eight years ago. READ MORE The Government is not alone in seeking to draw a line under crisis-era bailouts. The past month has seen Keir Starmer's administration in the UK sell its remaining shares in NatWest and the Dutch government reduce its holding in ABN Amro below 30 per cent. Elsewhere, Greece concluded the reprivatisation of its lenders late last year with the sale of a stake in National Bank of Greece. [ AIB share sale brings banker pay back into focus Opens in new window ] The sale of the final tranche of AIB shares leaves the State on track to fall about €700 million short of recovering its full rescue bill on a cash-in, cash-out basis, even after it goes about selling stock warrants held in the bank, estimated to be worth about €300 million. Still, it wasn't always a given that taxpayers would recover this much from the most expensive bailout of a surviving Irish lender – especially when AIB shares were trading below €1 apiece, a seventh of their current price, during the Covid-19 pandemic in 2020. 'It did look bleak at various points in terms of getting to this point,' said Des Carville, head of the Department of Finance's shareholding and financial advisory division, which managed the relationship with the bank. Des Carville, head of the Department of Finance's shareholding and financial advisory division 'These were risky investments. Owning equities is risky at the best of times. Owning shares in banks, as we've found out, is particularly so.' Three key factors have turned around AIB's fortunes in the past four years: a spike in interest rates globally as central banks fought inflation; the bank's return to loan-book growth after a decade and a half of contraction; and the shrinking of competition as Ulster Bank and KBC Bank Ireland exited the Republic. The biggest boost from higher interest rates has been thanks to inertia across Irish households as they continue to keep 85 per cent of their €166 billion of cash savings in on-demand and current accounts, earning little or nothing, rather than availing of rates of up to 3 per cent for certain accounts among domestic banks, including AIB. The fact that AIB's deposit base is much larger than its loan book also means that it has earned billions of euro in recent years from storing excess cash with the Central Bank of Ireland. AIB had €31.5 billion lying idle with the regulator at the end of last year. The going deposit rate across euro-zone central banks was as high as 4 per cent in 2024. Christ Cant of Autonomous Research in London, said in a report earlier this year that AIB is what Germans would call a 'eierlegende Wollmilchsau', or egg-laying woolly milk sow – a mythical jack-of-all-trades for investors. 'Amongst European banks, AIB provides an unusual combination of both exceptional capital return prospects [for investors] and strong balance sheet growth prospects, in a great zip-code,' he said, noting that the Republic was a 'structurally attractive market' and 'fiscally responsible sovereign'. Taxpayers felt over the years that bank bailouts left them holding eggs of a more sulphuric kind. AIB would lose more than €34 billion on soured loans – more than any other Irish lender – in the decade after Brian Cowen's government guaranteed the banks in September 2008, including bad-loan charges and losses on portfolio sales to the National Asset Management Agency (Nama) and overseas investment firms. The stench still lingers. Even though the Irish economy is now almost three times its Celtic Tiger peak of €197 billion in 2007, the banking crisis continues to be felt, with Irish households and businesses paying higher interest rates on loans than the EU average, creaking infrastructure and, most profoundly, a post-crash shortage of capital for residential development that has given rise to today's housing crisis. 'A real arrogance' Stephen Bell was part of a team of PwC consultants brought in to help AIB management in late 2010 as it headed into State control. 'One clear memory from my first days was sitting in an office with artwork on the walls and thinking to myself, each one of these pieces is probably worth more than the bank right now,' said Bell, who would serve as AIB's chief risk officer on secondment during 2011. AIB had an impressive collection of Irish art spanning the 1880s through the 21st century, including works from Jack B Yeats, Paul Henry, Sir John Lavery, and Roderic O'Conor. A few dozen of its best pieces would be handed over to the State after the bank succumbed to taxpayer ownership, ending up at the Crawford Art Gallery in Cork. 'There was a real arrogance about AIB ahead of the crisis. It saw itself as a multinational organisation, with its banking unit in Poland, interests in the Baltics and Bulgaria, a large stake in M&T Bank in the US, and a UK division,' said a former senior Central Bank official who dealt with the banks during the financial crisis, but who declined to be named. In the early days of the global crisis in 2007, the regulatory focus was more on Bank of Ireland because of its large mortgage book in the UK, a market where Northern Rock collapsed that September. 'Bank of Ireland had to circle the wagons earlier than AIB,' the former central banker said. It moved sooner to book large loan loss charges, setting aside €230 million for its then financial year to March 2008. [ How AIB went from boom to bust and back again Opens in new window ] AIB's hubris at the time was best captured in its decision to pay €270 million of interim dividends to shareholders that August as banks globally were hoarding capital. Two months later, then chief executive Eugene Sheehy said the bank 'would rather die than raise equity'. The bank's greater exposure than Bank of Ireland to commercial-property lending – which accounted for 36 per cent of its loan book in 2008, compared to 26 per cent at its rival – would ultimately result in it being effectively nationalised. Property and construction accounted for as little as 12 per cent of the bank's loan book in 1998. However, in 2004, AIB's then chief executive Michael Buckley set up a 'win-back team' to work out why it was losing business to Anglo Irish Bank. It subsequently ramped up lending, bankrolling big developers from Liam Carroll to Ray Grehan, whose property empires imploded during the crash. While AIB was known to have better IT systems than its main rival by the time of the crash, its decentralised commercial lending model – with local branches given significant autonomy to dole out loans – and weaker data and loan paperwork left it facing much deeper discounts from Nama when it took over risky real-estate loans. AIB transferred €20.4 billion of loans to Nama at a 56 per cent discount, while Bank of Ireland sent over half that amount, at a 43 per cent discount. 'Also, because the original management team at AIB was cleared out after the crash, it was on the back foot when it came to arguing about Nama discounts or stress tests,' the former central banker says. 'Bank of Ireland, which kept senior management and avoided State control, fought tooth and nail over everything. As it went through a number of leadership changes in the early years, AIB lost all continuity, strategic direction and became more risk averse for an extended period.' Bernard Byrne, who joined the bank in May 2010, initially as chief financial officer, would preside over a bank facing up to massive loan losses and booking a record €10.3 billion net loss that year. Bernard Byrne, former AIB chief executive. Photograph: Eric Luke 'The worst period was definitely 2010, trying to get close to the bottom of AIB's problems,' says Byrne. 'The deepening haircuts that it had to take on loans being transferred to Nama meant that any thought of the bank remaining mainly in private ownership evaporated.' It slunk into 99.6 per cent State ownership two days before Christmas – capping a tumultuous month that saw the State succumb to a €67.5 billion EU-International Monetary Fund (IMF) bailout. Litany of controversies Michael Somers, who launched the National Treasury Management Agency (NTMA) in 1990, was resistant when the then finance minister, Brian Lenihan, started badgering him to join the board of AIB as he prepared to retire at the end of 2009. He had his reasons. Somers had previously found himself in the trenches on AIB when Garret FitzGerald's government was forced to take over the bank's Insurance Corporation of Ireland subsidiary and bail out the bank after the insurer suffered large losses on high-risk insurance policies. Somers was deputy secretary general with the Department of the Finance at the time. 'The fear at the time was that international banks would pull credit lines from AIB and other Irish banks,' recalls Somers. He – as many others – would look on aghast as a litany of other skirmishes with controversy followed. Michael Somers, former chief executive of the National Treasury Management Agency and former vice-chairman of AIB. Photograph: Eric Luke AIB reached a €90 million settlement at the turn of the millennium with Revenue in relation to evasion of Deposit Interest Retention Tax in 2000. In 2002, the bank revealed that a rogue currency trader at its then Allfirst unit in the US, John Rusnak, had racked up a $691 million trading loss. In 2004, it was revealed that the bank had been overcharging customers on foreign exchange transactions for up to a decade, and two years' later, four former AIB executives reached a €206,000 tax settlement resulting from their involvement in a secret offshore investment company, called Faldor. Lenihan made a final effort in mid-November 2009 to change Somers's mind. 'He managed to get hold of me one evening at about a quarter to 12, after I'd gotten home from a nice dinner at the Dutch embassy. He said he needed to announce a number of positions the next morning and asked me again would I join AIB's board as deputy chairman,' he says. 'I relented.' Remedial work The outlook for AIB began to change when Duffy – an Irish banker who had spent his career overseas working for the likes of Goldman Sachs, ING and Standard Bank, leaving him untainted by goings on during the domestic property bubble – took charge in late 2011. By then, AIB was a shadow of its former self, having been forced to sell its 70 per cent stake in Poland's Bank Zachodni, a 24 per cent stake in Buffalo-based M&T Bank, and its holding in Goodbody Stockbrokers, as it raced to raise capital to fill a growing hole in its balance sheet from bad loans – and appease competition authorities in Brussels after receiving state aid. The bank had also inflicted €5 billion of losses on holders of its riskiest, subordinated bonds. 'It's easy to underestimate how much remedial work was done between 2010 and 2011 just to get to a place of some stability. But David coming in as CEO was hugely important,' says Byrne. 'The strength of his personality saw him take a huge amount of pressure off AIB – both politically and generally – and allowed people to work on what needed to be done to chart a way forward.' Return to profit Duffy's cost-cutting plan would involve the shuttering of 67 branches, salary cuts across layers of management, and the closure of the bank's legacy defined benefit pension scheme, where retirement benefits were linked to final salaries. It saw the bank return to profit in 2014, helped as a recovering economy allowed it to release some provisions previously set aside to cover bad loans. The bank also started moving at pace that year to resolve a mountain of bad debt on its balance sheet – which peaked at €31 billion, or more than a third of total loans in 2013. Irish banks also began that year, under pressure from regulators, to finally start to grasp the nettle on a mortgage arrears crisis that had been allowed to fester following the crash. Duffy – who was widely expected to lead AIB through an initial public offering (IPO) – quit unexpectedly in early 2015 to take over as CEO of Clydesdale and Yorkshire Bank in the UK, where he immediately enjoyed a basic salary double the €500,000 allowed at bailed-out AIB – and a generous bonus plan. Mark Bourke, former AIB chief financial officer. Photograph: Eric Luke It would fall to Byrne, Duffy's successor, and his chief financial officer Mark Bourke to get AIB ready for an IPO. Two years in the planning, Project Viking, as it was dubbed, culminated in June 2017 when Paschal Donohoe, only days into the job as Minister for Finance, pressed the button on a sale of a 28.8 per cent stake in the bank to stock market investors, raising €3.4 billion. 'US investors, particularly the big hedge funds, were all talking about the 'reflation trade' at the time,' recalled Bourke, referring to an investment strategy of piling into certain sectors that tend to perform well immediately after a recession. Irish gross domestic product (GDP) soared almost 8 per cent in 2017, making it the EU's fastest-growing economy for the fourth straight year, even if the figures were flattered by the State's large multinational sector. 'It was clear that markets were open and US funds, who were crucial to the ultimate success of the transaction, were prepared to invest in Europe again,' added Bourke, who is currently CEO of Portuguese lender Novo Banco, which French banking group BPCE agreed to buy last week. On the IPO roadshow, AIB teams held hundreds of meetings with potential investors over a number of weeks in Europe, North America and Asia. 'Because we spent so much time answering questions from international investors on the macro Irish story, it created something of a 'halo effect' for other Irish companies and the sovereign,' says Byrne. Contraction to growth Byrne used an Oireachtas finance committee appearance in December 2017 to urge the government to sell down more shares, as the stock was riding high. A global stock market slump in the second half of 2018 killed off any such ambition. The market appetite for Irish banks was dented further in quick succession by the threat of a hard Brexit; low demand for loans amid weak housing starts and cautious businesses; an ultra-low interest rates environment as Europe grappled with an era of subpar inflation, and the Covid-19 pandemic. 'The investor demand certainly was there after the IPO and there was an opportunity to move quickly to sell more shares,' Byrne says. 'There is always a risk of being caught out by unfavourable markets if you don't go when the stars are aligned.' AIB's return to full private ownership took longer than Byrne expected back in 2017. [ The Irish Times view on the State selling out of AIB: competition in banking is now the issue Opens in new window ] His successor, Colin Hunt, who took charge in March 2019, found the initial strategic plan that he and his CFO Donal Galvin had spent a year working on quickly made redundant as Covid-19 threw Ireland and much of the rest of the world into lockdown within weeks of it being unveiled. Loan payment breaks for businesses and households hit by the pandemic superseded loan growth for a period. But the bank has seen a surge in profits in recent years – with net income hitting a record €2.35 billion last year – driven by soaring interest rates as central bankers fought inflation triggered by effects of the pandemic and war in Ukraine. AIB and the other two remaining domestic banks, Bank of Ireland and PTSB, have also been helped as they carved up the loan books and deposit bases of Ulster Bank and KBC Bank Ireland – before the interest rates cycle turned. AIB has also bought back Goodbody Stockbrokers and pushed back into the life and pensions business – which it exited in 2012 as it put Ark Life into winddown – by setting up a joint venture with Irish Life's Canadian parent, Great-West Lifeco, in an effort to catch up with rival Bank of Ireland in the wealth and life insurance market. Colin Hunt, AIB's current chief executive. Photograph: Shane O'Neill/Coalesce AIB saw its loan book contract by almost 60 per cent to €58.4 billion between 2008 and 2021, amid loan sales, and households and businesses, scarred by the crash, repaying debt faster than taking on new loans. However, it has posted underlying loan book growth over the past three years, even after stripping out acquired Ulster loans, following a series of false dawns. A big driver has been green and transition lending, spanning everything from domestic mortgages on energy-efficient homes to an international climate capital business that specialises in lending to large scale renewable and infrastructure projects across Ireland, Britain, Europe and North America. Hunt was asked by one of the overseas investment bankers who beat a track to his office on his appointment six years ago what he'd like to be remembered for 10 or 15 years later. Apparently, he was shocked by the answer: decarbonisation. 'The investment banker was concerned this might appear off-piste if uttered in public. No one was talking about green finance at the time,' says a person familiar with the meeting. 'That's clearly changed in recent years.' AIB's international climate capital unit – where gross loans grew by 34 per cent last year to €5.5 billion – has provided another growth angle for a bank that remains a shadow of its boom-era self. 'Don't expect us to go out and buy another eastern European or US regional bank any time soon,' a senior executive says. Era of normalisation The last government resumed share sales in AIB in early 2022, when its stake stood at 71 per cent. AIB's financial results since the crash have routinely included a lot of what analysts call 'noise' from exceptional charges and gains. Crisis-era loan losses would be followed by a drip-feeding of provisions – which totalled more than €600 billion – to deal with the group's role in the industry-wide tracker mortgage scandal, including almost €97 million for a Central Bank of Ireland fine. More recently, the bank has taken large provisions for customer compensation on speculative noughties UK commercial property investments, known as Belfry funds, that failed, and costs associated with acquiring Ulster Bank loans. Exceptional charges fell by more than half last year to €66 million – heralding, what Hunt told analysts in March, was an era of 'normalisation'. 'We don't expect any material exceptional costs in this year. And I certainly don't want to find ourselves in a position where we have to incur more exceptional costs going forward,' he said at the time. While AIB is not on track to repay all of its bailout, the Government estimates that it is currently about €600 million above water on a combined €29.4 billion pumped into AIB, Bank of Ireland and PTSB – thanks to a €2 billion cash surplus recouped from Bank of Ireland. [ AIB to sell its 49.9% stake in merchant services joint venture Opens in new window ] 'In overall terms this has to be seen as a very positive outcome for the exchequer – and effectively delivers on the Government's commitment many years ago to recoup all the monies invested, which seemed a very unlikely outcome for a long time,' says John Cronin, founder of SeaPoint Insights, an independent research and analysis firm specialising in banking. 'That being said, equity investors in banks usually expect a return of more than 10 per cent per annum – so looking at it through a return on investment lens tells a different story.' A recovery has been made up of bank guarantee fees, interest on bailout bonds, and dividends. It ignores interest paid on money borrowed to save the banks, the 'opportunity cost' to the State's former pension reserve fund (part of which is now part of the Ireland Strategic Investment Fund) investing in ailing banks rather than putting cash to work elsewhere – or, indeed, what inflation has done to the time value of money. Carville insists that State's objective was always clear. 'We viewed the investments on a cash-in, cash-out basis,' he says. Not everyone agrees. 'If you went to a bank to borrow money and offered only to pay back the principal, you'd be laughed out of the place,' says former NTMA chief Somers. Societal scar If top executives were cheered by Donohoe's decision to lift the €500,000 pay cap at the bank on Tuesday after the sale of the remaining State shares, they were keeping it to themselves. Senior AIB officials were keen that there would be no form of celebration as the bank saw off the State as an investor, according to sources. 'We owe an immense debt of gratitude to the Irish taxpayer for the support during one of the bank's most challenging times,' Hunt wrote in an email to employees that morning. Staff leaving the group's Molesworth Street headquarters that evening could not have missed a ruckus down the road as hundreds protested outside the Dáil about the housing crisis – providing a reminder of the deepest societal scar left by the banking crash.

Irish Times
3 hours ago
- Irish Times
Micheál Martin and Paschal Donohoe are responsible for this Government's lethargy
The Taoiseach and the Minister for Finance are the key members of this Government, but they are hardly its driving force. These dynamics matter because we have a Government with power but so far neither the will nor the cohesion to deliver. All the while the world is changing rapidly and our exposure to events is growing. Micheál Martin scooped the entire electoral dividend available to the two Government parties in the last election. He has complete mastery over Fianna Fáil , but having arrived where he wanted to be over decades, he now seems unable to exercise power effectively. Paschal Donohoe is the principal Fine Gael presence in Cabinet by default. He is the crutch his leader Simon Harris reached for in a disastrous election campaign. He is indispensable in a diminished Fine Gael , yet he seems unable to exert the fiscal discipline and effective delivery of infrastructure the country needs. READ MORE Harris was permanently damaged by that election campaign and he still confuses creating distraction with effective action. Minister for Public Expenditure Jack Chambers has a claim to consideration as a force at the centre of Government. It is too soon to say for sure, but nothing yet indicates he is. The annual National Economic Dialogue on Monday offered a good analysis of the challenges we face . Tariffs and the fragmentation of the global trading system could have far-reaching consequences for the Irish economy. Foreign-owned multinationals account for 84 per cent of corporation tax revenue and around half of income tax and VAT paid by all companies in Ireland. The narrowness of our tax base means that €9 in every €10 received last year came from income tax, corporation tax and VAT. Unlike other rich countries, , we don't do any other taxes on property or wealth in scale sufficient to make a real contribution or to provide a cushion in a downturn. That is a mistake we have made before and will regret again. Worse, this Government has shrunk our domestic tax base further. In 2019, 30 per cent of income earners did not pay income tax or USC. This year that is expected to rise to 33 per cent. This would not pass for prudence in Las Vegas. In the meantime the Irish Fiscal Advisory Council estimates that Ireland's infrastructure is 25 per cent lower than average for a high-income European country. Inadequacies in water supply, sewerage and the electricity grid are barriers to building homes. Government spending more than doubled in a decade. This year spending is rapidly outpacing what was provided for in the budget last October and, oddly, the Department of Public Expenditure is not publishing monthly expenditure reports. Opening the National Economic Dialogue, the Taoiseach warned of 'unprecedented challenges', called for 'courage and ambition' and said we must prepare by 'controlling the controllables'. But what is out of control is under his authority. This is the cumulation of a decade-long, ongoing spending splurge and the failure to reform or lead the public sector. Donohoe is the continuous thread in the decline of purpose in our economic management, which, aside from our response to Covid-19, characterises that time. He accommodated skilfully under three party leaders and made the improbable plausible at a cost to the country. He seems unwilling and unavailable to engage in the combat required for cultural change and fiscal discipline in a system he too seldom challenged. In contrast to Donohoe, whose highest promotion may still be ahead, politically this is the moment of maximum Micheál Martin. Apart from 10 days in January 2011 after he resigned from Brian Cowen's cabinet and before he became leader of Fianna Fáil, he has been on his party's front bench for 30 years, its leader for 14 and in government for 19 in all. He has served his ambition by laying off risk rather than taking it on. Constantly frustrated by the system he presides over, he is also unwilling to take it on. His department is no longer the control room of that wider system which openly disparages the departments of Public Expenditure and Housing as institutionally inadequate. But the Taoiseach will not take control. Off-laying responsibility rather than taking on risk is his preferred route, Ministers – not the Taoiseach – are made to be collateral damage. By dint of dysfunction, we have an asymmetrical power structure in Government that intensifies the limitations of its principals. There are pockets of energy in departments such as Health, Justice, Higher Education and Enterprise. But as a whole, it is characterised by lethargy. Watching each other is preferred to working together. Our best hope is that another crisis might provoke an adequate response.