Suckers taxed to the hilt to save AIB — a bank that will pay no tax for 30 years
BANKERS must be delighted. For them, the taxpayers and consumers are the gift that keeps on giving. And what do they have to give in return? Not much, is the answer. AIB is about to float a chunk of its shares on the Dublin and London stock markets. Thanks to taxpayers stuffing €21.8bn into rescuing it, the bank has gone from being a financial basket case to a hot investment proposition.
We learned in this newspaper last week that the bank will not have to pay corporate tax for 30 years, because its historical losses can be carried forward.
The bankers messed up and needed a €21.8bn bailout from ordinary taxpayers, but it will not have to pay corporate tax for decades. You could not make it up.
Income taxes on ordinary workers are now €7bn a year higher than before the crash, to say nothing of other charges and levies, mainly to fund the bail-out of the banks. And customers of banks are being treated abysmally, while our regulators stand back and watch.
The Irish banking market is dysfunctional. Some 70pc of the Irish mortgage market is controlled by just three banks – AIB, Bank of Ireland and Ulster Bank. We have some of the highest variable mortgage rates in the eurozone.
Savers here get a raw deal, with the two big banks each paying 0.01pc in interest. That’s 10c a year on a €1,000 of savings, before tax.
AIB, as the largest retail and commercial bank with 2.3m retail and SME customers, is the biggest culprit.
It controls 36pc of new mortgage lending, 37pc of personal current accounts, 22pc of personal loans and 35pc of credit cards.
The bank is equally dominant in the small business market with a 44pc share of business current accounts, 36pc of main business loans, 26pc of business leasing and a nearly half of all business credit cards.
AIB is the big beast in banking here, and so is the pacesetter.
Our regulators, such as the Central Bank and the Competition and Consumer Protection Commission, should hang their heads in shame for allowing a rescued bank to become so dominant.
Those who ran the bank into the ground exited with monstrously generous pensions and other payoffs. Not so for bank customers and taxpayers who have paid, and continue to pay, a huge price for saving AIB.
It is about to embark on a new chapter with the flotation. There will be millions made by banking advisers, retail investors with more than €10,000 to punt, hedge funds and big corporate investors. For the little guys who saved it, the message is thanks suckers.