Business giant loses €1bn on bank shares
Sean Quinn with his daughter Ciara after her wedding in Co Cavan last November
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Ireland's richest man has lost an estimated €1bn on his 15pc stake in Anglo Irish Bank over the past 18 months.
Sean Quinn built up most of his holding in the first nine months of 2007, market sources said, using his estimated personal fortune of €4.7bn.
At the time of buying, Anglo's shares were changing hands at an average of €15 each, but they have since plummeted to just €4 each.
The Fermanagh-born tycoon has now decided to convert the sophisticated market instruments he used to build up the stock -- called 'contracts for difference' -- into actual shares.
A 15pc stake in the company was worth an estimated €465m at close of trading last night. The entire company is valued at €3.1bn.
Despite becoming the highest-profile individual to stomach losses from the biggest destruction of wealth in the history of the Irish stock market, Mr Quinn vowed to stick with his investment.
"The [Quinn] family regards these shareholdings in Anglo Irish Bank as long-term holdings with significant opportunity for capital growth over such a period," he said in a statement.
The billionaire, whose business interests range from cement-making to insurance, is confident Anglo will be able to ride out the current turmoil in the global banking sector.
"He's putting his money where his mouth is," said Anna Lalor, an analyst with Goodbody Stockbrokers. "He probably sees something of his own entrepreneurial style in Anglo's management."
Employing 1,900 people, Anglo Irish Bank Corporation plc is headquartered in Dublin and primarily serves the business sector, specialising in three core areas -- business lending, treasury and wealth management.
Mr Quinn, who built his business empire from a 1973 start quarrying cement from his family's farm at Derrylin, Co Fermanagh, ranks among Ireland's most successful businessmen.
However, the market downturn has taken its toll on the profitability of Quinn-Direct, the jewel in the crown of his enterprises. The insurance company saw its pre-tax profits tumble 25pc in 2007 to €245m, it emerged this week, dragged down as returns from its investment portfolio almost halved to €84m.
Mr Quinn's cement, radiators, and hotel and pub operations also face challenges as Ireland and the UK hover on the brink of recession.
Shares in Anglo jumped over 5pc within minutes of trading getting under way on the Irish stock market yesterday morning as investors cheered Mr Quinn's commitment to the group.
But they soon joined other financials in all-too-familiar negative territory, as Credit Suisse became the latest influential investment firm to slash its earnings estimates for Irish banking stocks.
The Swiss brokerage has joined others in estimating Irish banks face billions of euro of bad-debt losses as borrowers default on mortgage and commercial property loans amid falling house prices and rising unemployment figures.
"House prices have fallen 10.5pc from the peak," Credit Suisse said, adding they "could fall a further 25pc-30pc".
Anglo Irish Bank closed 6.5pc lower yesterday, while Allied Irish Banks sank 6.6pc, Bank of Ireland lost 6.2pc and Irish Life & Permanent plunged 12.9pc.
The weak performance by the financials sector pulled the ISEQ index of Irish shares down 3.2pc to below the key psychological 4,400-point level for the first time in almost five years.
Battering
Financials globally took a battering as investors continued to digest weekend news that the US government was to bail out the country's two largest and troubled mortgage groups -- Fannie Mae and Freddie Mac.
The fear in the market is that some of America's regional banks may not have such a lucky escape from the biggest US mortgage market crisis since the Great Depression of the 1930s. California bank IndyMac collapsed last Friday -- one of the biggest financial institutions to go under in US history.
l The Supreme Court will deliver judgment today on the appeal by BUPA Ireland -- now part of Quinn Insurance -- against a High Court's rejection of its challenge to the risk equalisation scheme. Risk equalisation means other insurance companies must compensate VHI for its older and less profitable customer base.
The Quinn Group has argued it would incur costs of some €30m if obliged to make payments under the scheme.
- Joe Brennan
