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Report: Irish banks get assurance over deferred tax assets

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Report: Irish banks get assurance over deferred tax assets

Allied Irish Banks Plc and Bank of Ireland Group Plc saw their shares rise March 28 after Irish Finance Minister Paschal Donohoe said lenders may continue to not pay corporate taxes to offset accumulated losses during the financial crisis, The Irish Times reported.

Speaking before the lower house of the Irish legislature, Donohoe indicated that revising how losses for Irish banks are taxed would hurt the ability of the government to maximize returns on its investments in banks, according to the March 28 report. The Irish state, through the Ireland Strategic Investment Fund, owns 71.12% of AIB and 13.95% of Bank of Ireland, according to data from S&P Global Market Intelligence.

Shares in the two lenders had fallen by more than 11% on concerns about the so-called deferred tax assets, or DTAs, after The Sunday Business Post reported that Ireland's Oireachtas Public Accounts Committee wanted to recommend that a "sunset clause" be added into law to limit to 10 years bailed-out banks' use of DTAs to pay no corporate taxes, The Irish Times noted.

Goodbody Stockbrokers projected that AIB, which has €2.6 billion of DTAs on its balance sheet, would take 17 years to use up such assets, according to the report. Bank of Ireland and Permanent TSB Group Holdings Plc have DTAs of about €1.2 billion and €350 million, respectively, The Irish Times said.

Bank of Ireland closed up 3.43% in Dublin trading March 28, while AIB rose 2.13%.