Ireland looks to Gulf to buy its banks

Irish officials are on a whistle-stop tour of the Gulf to pave the way for major investments in the country in the months to come, including the possible sale of stakes in banks.

Protesters shout and display placards outside the Irish Parliament building in Dublin. Debt-plagued Ireland has announced its toughest-ever austerity budget to help fix its battered public finances.

Top Irish officials have approached Gulf sovereign wealth funds to gauge interest in the sale of Ireland's banks after the ?85 billion (Dh412.26bn) bailout from European governments and the IMF.
John Bruton, a former Irish prime minister, is leading a delegation from the country on a whistle-stop tour of the region as Ireland prepares to sell assets.
Irish officials are visiting sovereign funds in the UAE, Qatar, Bahrain and Saudi Arabia, where they have already met Prince Alwaleed bin Talal bin Abdulaziz Al Saud, the chief of Kingdom Holding and one of the world's 20 richest men. Mr Bruton is the head of the International Financial Services Centre in Ireland, which aims to attract financial companies to set up there.
"The message was 'our banks are for sale to any investors, foreign or local'," said one executive at a UAE sovereign wealth fund who met the delegation this week.
The visit follows recent similar trips made by groups from Greece and Spain seeking investment in ailing financial institutions.
Mr Bruton said yesterday he was not representing the Irish government in an official capacity but discussing the general situation and opportunities in the country, including the potential sale of banks and bank assets.
"We are not here to facilitate the sale of any assets or start any negotiations," said Mr Bruton. "That is the government's decision and role, but obviously discussions have taken place about the Irish economy generally. The central bank has clearly said asset sales are being studied."
While the discussions were informal, he said they could provide the basis for negotiations between Ireland and the Gulf's wealthiest investors for future asset sales. Others on the trip included officials from Ireland's Industrial Development Agency.
Mr Bruton's meetings come as Ireland faces increasingly stark economic challenges following the Celtic Tiger boom years in which the economy expanded rapidly between 1995 and 2007 before unravelling because of excessive public and private-sector borrowing and the collapse of property prices.
Fitch Ratings yesterday downgraded Ireland's sovereign rating to "BBB-plus" from "A-plus" after accounting for the additional costs of restructuring its struggling economy and banking sector.
To reduce its debt, Ireland has embarked on severe budgetary cost cutting and is drawing up a list of assets it could sell to raise cash.
Its troubled banks, including Anglo Irish Bank, Bank of Ireland and Allied Irish Banks, have sold a large portion of their loan books to a controversial government vehicle, the National Asset Management Agency. It has already acquired a large portion of the bad debts accumulated by Ireland's top lenders.
Ireland may have difficulty in convincing Gulf investors that this is the right time to invest in its ailing economy, said Victoria Barbary, a senior analyst at Monitor Group in London.
While some sovereign wealth funds were invested in financial institutions in the US and UK in the run-up to the financial crisis, the challenges of Ireland are much clearer than they were before the collapse of Lehman Brothers and when the full extent of the subprime mortgage crisis became evident.
Abu Dhabi investors bought stakes in both Citibank and Barclays during the financial crisis with mixed results.
"Back in 2007 and 2008, these funds genuinely believed they were buying good assets for cheap," said Ms Barbary. "Now I think everyone is a little bit older and wiser. I don't think that the Irish economy is an attractive one for any investors at the moment. It wouldn't fit that they would buy this in most cases."
 
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