A leading UK stockbroker has taken the highly unusual step of putting a 'Buy' recommendation on an Irish bank's stock.
Collins Stewart is recommending Bank of Ireland to its clients, describing it as the "strongest player'' in the Irish banking sector.
The company said Bank of Ireland was capable of €1bn in earnings a year even with the economy in a difficult phase.
"Unquestionably, Bank of Ireland with its completed rights issue is best positioned to win market share and drive returns higher,'' said the broker, which has operations here.
Its Irish analyst Gary McCarthy said the retreat of the foreign banks from the Irish market helped to improve things for Bank of Ireland. He said some of the nationalised rivals would have restrictions placed on them in regard to deposit rates, giving Bank of Ireland another advantage.
Mr McCarthy said the bank's mortgage book would still have to take "some pain'' but the losses would "drip through'' the profit and loss account gradually rather than causing the bank a major problem.
Talking about Ireland generally, Mr McCarthy said population growth was still on the cards and with a change to tax policy more IT industry was likely to locate here.
Mr McCarthy said the valuations of Irish banks before the crash were totally wrong, but the value now being placed on Bank of Ireland was equally wrong.
"Aside from the macro options, consider that the debt- fuelled expansion of the Irish banking sector put the combined market value of AIB, Bank or Ireland and Anglo Irish at more than €50bn and close to 35pc of GDP,'' he said.
"That number was pure lunacy but the market value of the last remaining private franchise at less than 10pc of that number is equally wrong,'' he added.