Saturday 22 July 2017

Brokers recommend AIB despite imminent wipeout

Laura Noonan

Laura Noonan

TWO stockbrokers are still recommending that investors buy shares in AIB -- even though the bank's shareholders look set to be wiped out by imminent nationalisation.

Data compiled by Bloomberg shows Credit Suisse rates AIB as an "outperform" while Societe General ranks the Irish bank a "buy".

The Bloomberg data also lists Dublin-broker Goodbody's, which AIB is in the process of selling, as having an "add" recommendation on the bank.

Analysts at Goodbody's last night said that all its Irish bank recommendations had been "pulled" recently in view of the sector's volatility.

Shares in AIB closed at about 42c a piece last night, giving the bank a market capitalisation of just over €455m.

The Government hopes to put in about €4.5bn of new cash by the end of the year, decimating the bank's existing shareholders.

Any remaining shareholder equity will be diluted again in February, when the bank must take in another €5.3bn of capital.

Despite this bleak prospect, Bloomberg data shows just three stockbrokers have a sell or equivalent recommendations on the near-nationalised AIB.

AlphaValue rates the stock at "sell", JP Morgan has an "underweight" recommendation, RBS has "hold" and Barclays has "underweight/neutral.

Of the Irish brokers, Davy has a "neutral" recommendation on AIB, while NCB has a "hold" on the bank.

Brokers have been strongly criticised for issuing glowing recommendations on stocks in the run-up to the financial collapse.

Irish Independent

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