Monday 2 March 2015

BoI is Barclays' top pick for coming year

Published 07/01/2014 | 02:30

IRISH Banks 1...The Bank of Ireland headquarters in central Dublin, Ireland, Thursday, March, 31, 2011.  The latest estimate of the cost of the Irish banking crisis is expected to be revealed later on Thursday with the release of bank stress test results. They are expected to show the banks need an extra 30 billion euros ($42.29 billion/26.3 billion pounds).The Irish Central Bank has tested four lenders - Allied Irish Banks, Bank of Ireland, Educational Building Society (EBS) and the Irish Life & Permanent. The latest capital injection is expected to leave all four institutions in majority government ownership.  (AP Photo/Peter Morrison) ...I
The Bank of Ireland headquarters in central Dublin.

Bank of Ireland has been named by analysts at Barclays as their top European banking pick for 2014.

Initiating coverage of Bank of Ireland, the Barclays fixed-income analysis team said that after being loss-making for five years that the Irish institution has seen a "significant improvement" in pre-provision profitability which, combined with falling impairment losses, "could mean a positive bottom line profit for 2014".

The Barclays analysts -- who focus on fixed-income investment opportunities rather than the equities typically bought by ordinary punters -- are betting that special shares issued by the bank are the best way to capitalise on its improving performance.

Barclays says that investors should opt to invest in Bank of Ireland's 10.24pc preference shares, which will yield a 7.5pc return up to July 2016.

It's also recommending that credit investors take positions in five-year subordinated credit default swaps attached to Bank of Ireland, which it says "trade at one of the widest levels in peripheral Europe".

But the report from Barclays should provide some cheer for shareholders of Bank of Ireland's ordinary stock.

Irish Independent

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