Irish banks avoid sub-prime debacle
THE carnage in equity markets from the meltdown of US sub-prime mortgage markets inevitably led to questions about the exposure of the Irish banks to the emerging debacle.
When the question was put to BoI, a spokeswoman replied it had "absolutely no exposure" to the US sup-prime mortgage market.
And AIB's breakdown of its exposure to "market hotspots" revealed a total portfolio of just under €670m, of which less than €500m was in the US. All of these assets were being held to maturity. According to AIB, between them, these assets account for just 0.6 per cent of its €120bn loan book. Not withstanding the success of both in avoiding the crisis, AIB closed the week at just €18.60, wiping out most of the gains following the publication of interims. BoI also fell, from €14.67 on Wednesday to just €13.40 by Friday.
Still, it's an ill wind that blows no good. On Thursday, the ECB lent €95bn to banks to ease the crisis and a further €61bn on Friday. After lending such huge amounts to the banking system it is now far less likely that the ECB will raise interest rates again next month.
