The Shareholding Management Unit (SMU) is responsible for the management of the shareholdings and investments of the Minister for Finance in the banking sector. These include investments in Allied Irish Banks (AIB), Bank of Ireland (BOI) and Permanent TSB (ptsb)). The SMU is also responsible for the management of the Minister’s shareholding in the National Asset Management Agency (NAMA) and the Unit represents the Minister’s interests in relation to the oversight of NAMA. The Unit is also responsible for representing the Minister’s interests in relation to the liquidation of IBRC and has policy oversight for the Credit Union sector.
While the banks’ day to day operations are managed on an arm’s length basis and are governed by published Relationship Framework Agreements, the unit is responsible for the overall strategic direction of the banks and for developing and executing plans to optimise the value of the State’s investments. As part of this process the Unit engages intensively with the banks on a range of issues, while respecting the commercial independence of each institution.
The Unit is comprised of 20 people who are either Civil Servants or secondees from the National Treasury Management Agency (NTMA) and have a range of skills and expertise in investment banking, corporate finance, debt/equity capital markets, equity research, banking, accounting and law.
Members of the Unit were instrumental in overseeing the State supported recapitalisation of the Irish banks in recent years but with the sector now recovering, its work has progressed to pursuing strategies designed to recover this investment.
Significant transactions that have been led by the Unit include the following:
- Oversight of the recapitalisation and deleveraging at the Covered Banks, as part of the Central Bank’s 2011 PCAR/PLAR programme
- Acquisition of Irish Life in 2012 and subsequent sale in 2013 for €1.3bn with an additional dividend of €40m paid to the State in 2013
- Design, negotiation and implementation of the transaction to replace the IBRC promissory notes with long dated Irish government bonds in 2013
- The Special Liquidation of IBRC
- Publication of a report in NAMA under section 227 of the NAMA Act
- Management of the sale of the State’s €1bn investment in Bank of Ireland’s contingent capital notes in 2013
- Management of the sale of the State’s €1.8bn preference shareholding in Bank of Ireland’s in 2013
- The re-IPO of PTSB which involved a migration to the main markets of the Irish and London Stock Exchanges, a €400m primary issues, €98m secondary issue and €125m AT1 issue
Much of the Unit’s work during 2015 will focus on the restructuring of AIB’s balance sheet with a view to positioning the bank to commence repayment of the State’s €20.7bn investment and execution of a capital fundraising for ptsb following the SSM’s capital assessment in 2014.