ISIF stakes in Irish banks plunge €5.2bn in value in one year

State fund also estimates that fair value of Irish investments is down 2.3pc

THE value of the State’s holdings in AIB and Bank of Ireland fell by €5.2bn over 12 months according to a financial half-year update from the Ireland Strategic Investment Fund (ISIF).

The report, published in recent days, shows that ISIF’s ‘directed portfolio’ which primarily comprises the state’s stakes in AIB and Bank of Ireland was valued at €7.8bn at the end of June 2019.

By June 2020, this portfolio’s value had fallen to €2.6bn.

In addition to stakes in AIB and Bank of Ireland, the directed portfolio also includes its commitment to the Strategic Banking Corporation of Ireland (SBCI) and a loan to Home Building Finance Ireland (HBFI), although this stands at zero.

A spokesman for ISIF said: “At December 2019 the directed portfolio value was €6.9bn comprising Bank of Ireland €0.7bn, AIB €6bn and cash committed to SBCI €0.2bn. At 30 June 2020 the directed portfolio value was €2.6bn comprising Bank of Ireland €0.3bn, AIB €2.1bn (the share price for AIB Group fell from €3.11 per share to €1.12 per share (-64pc) in H1 2020), loan to HBFI €0.0bn and cash committed to SBCI €0.2bn.”

AIB shares closed at €1.06 on Friday.

ISIF also has a wide range of investments in Ireland, as well as a global portfolio, and said in its half-year update that 2020 had been “a challenging period”, with overall performance for the first six months down 3pc.

“ISIF booked an unrealised loss to the fair value of the Irish Portfolio which was calculated using the best information available resulting in H1 2020 performance on the Irish portfolio of minus 2.3pc,” said the report.

The global portfolio performance for the first six months was down 3.5pc.

A spokesman said: “ISIF’s Irish Portfolio is largely invested in private assets and therefore valuations are not as frequent as public or listed assets. In ISIF’s valuation of the Irish Portfolio at H1 2020, an unrealised reduction to the fair value of the Irish Portfolio was applied, reflecting a preliminary estimate of the impact to the portfolio of Covid-19 and resulting economic shock.

“Rather than waiting for the year-end third-party valuation exercise, this reduction was applied to provide more timely information on the performance of the portfolio. It is important to note that ISIF’s investment performance should be considered over the long term given ISIF’s investment horizon is mainly medium and long term,” he added.