Investors selling off shares to recoup whatever they can get
Published 09/04/2011 | 05:00
IRISH Life & Permanent's (IL&P) shareholders have followed Anglo and AIB into the financial nightmare that has seen their investments turn to dust. The shares are now trading at around 13c, down from highs of more than €22 when the economy was booming in 2007.
It's a spectacular fall, and one which Irish Life & Permanent's stockholders believed they might escape before the Government announced its plans for the banks last week.
As the bubble burst and Ireland's biggest banks collapsed, Irish Life & Permanent managed to remain independent and didn't need a government bailout. Now everything has changed, and nobody is betting on the shares recovering. It has been told to sell off its life insurance company as part of its efforts to raise €4bn in cash to satisfy the Financial Regulator.
If it fails to raise that money, it will end up being owned by the Government. This is the worst-case scenario for shareholders.
Once the Government injects further billions it will take a majority holding in the bank, reducing the shareholders' investments to almost nothing.
Stockbrokers say some shareholders have been selling off their stock, even at these prices, to take whatever cash they can.
Others have decided it is hardly worth their while selling, and are holding on to see what might happen many years down the road.