Thursday 8 December 2016

Focus on banks in day of drama

Published 01/10/2010 | 05:00

AIB was the most volatile of the banking stocks as the Government acknowledged it will become a majority shareholder in the institution. Photo: Bloomberg News
AIB was the most volatile of the banking stocks as the Government acknowledged it will become a majority shareholder in the institution. Photo: Bloomberg News

LITTLE surprise that the focus for yesterday was firmly on the country's financial institutions as the Government revealed its estimate for the total cost of bailing out Anglo Irish Bank and other covered institutions.

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Markets had been jittery ahead of the announcement and the confirmation that the State will become a majority shareholder in AIB initially sent that stock plummeting by as much as 30pc before it was resuscitated in later trading but remained on life support.

The ISEQ Overall Index initially rose, dipped, climbed again, and fell once more during the day -- finishing the session on what was a momentous day up just 19.1 points, or under 1pc at 2,676.18.

AIB was the most volatile of the banking stocks as the Government acknowledged it will become a majority shareholder in the institution. Merrion Stockbrokers analyst Sebastian Orsi described AIB's additional capital requirement as the "big surprise" in yesterday's announcement.

At the open, it tanked 18.5pc to 45c, but the carnage continued as it shed as much as 28.5c to under 40c by lunchtime. It recovered later before closing down 8.1pc at just under 51c.

Bank of Ireland, which has already secured its required additional capital, fared much better.

It rose by around 10pc during the day before ending the session 8.8pc higher at 62c.

IL&P, which isn't one of the institutions covered by the State's banking guarantee, closed up 1.5pc at €1.39.

Shares in Kenmare Resource, -- the resources firm that owns an ilmenite mine in Mozambique -- jumped 11pc to 24c, valuing the company at €577m. The company recently said it expected to substantially boost production of the mineral at its mine next year.

Other stocks registered smaller movements during the day, with Grafton Group up 1.6pc to €3.05, and Aer Lingus down 2.3pc to €1.04.

National benchmark indices rose in 11 of the 18 western European markets.

France's CAC 40 dropped 0.6pc, Germany's DAX Index fell 0.3pc and the UK's FTSE-100 slipped 0.4pc. Spain's IBEX 35 advanced 0.3pc even as Moody's downgraded the nation's top credit rating by one level to Aa1.

Wider European stocks had opened lower on the bailout costs of Irish banks but the Stoxx 600 later rallied as much as 1.1pc following better than forecast data on US growth, employment and business activity before yielding all the gains in the final hour of trading.

Deutsche Bank climbed 2.3pc to €40.15 after chief executive Josef Ackermann said Q3 sales and trading revenue at Germany's biggest bank matched last year's level after a rebound in September.

Irish Independent

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