DUBLIN (Reuters) - Ireland’s finance minister said on Wednesday Goldman Sachs GS.N is advising the Irish state free of charge on the sale of one of its banks in order to boost its reputation and was one of five investment banks to offer to work pro bono.
Dublin appointed Goldman Sachs to advise on the sale of Allied Irish Banks ALBK.I last month, looking to recover all 21 billion euros ($24 billion) spent on rescuing what is Ireland’s second-largest bank by assets.
Finance Minister Michael Noonan said that of the 11 investment banks on a pre-approved panel that tendered for the work, five offered to do it for nothing. A transaction is not expected until the second half of 2015 at the earliest.
“It’s common practice seemingly, particularly in the city of London, that finance houses like Goldman Sachs feel that their reputation is enhanced for other work if they’re the advisers to sovereign governments for key pieces of work,” Noonan told parliament.
“An IPO for AIB, if we’re selling 25 percent of it, would be one of the biggest IPOs ever in the London stock market. So obviously there’d be great attention paid to who the advisers are. There’s no commitment at the point of sale that Goldman Sachs would get any additional work.”
The reputation of banks and investment banks suffered badly in Ireland as a result of its financial crisis in 2008 that forced the government to find 64 billion euros, equivalent to 40 percent of annual economic output, to save its banks.
Reporting by Padraic Halpin; Editing by Mark Heinrich