Business Irish

Tuesday 25 June 2019

Odey shorts Bank of Ireland after Brexit vote

Bank of Ireland chief executive officer Richie Boucher: BofI faces post-Brexit turbulence Picture: Frank McGrath
Bank of Ireland chief executive officer Richie Boucher: BofI faces post-Brexit turbulence Picture: Frank McGrath
Gavin McLoughlin

Gavin McLoughlin

High-profile hedge fund manager Crispin Odey is shorting Bank of Ireland on foot of the Brexit referendum.

Odey's bet that the bank's share price will fall - disclosed on June 27 - is revealed in Bloomberg and Central Bank data. He's shorting almost 175 million shares - around 0.54pc of the bank.

Bank of Ireland's shares plummeted after the Brexit vote. Having tipped 27c in Dublin on June 23 as Britons went to the polls, they were down at 17c by June 27, but had recovered to 20c as of Friday's close.

Odey also shorted Bank of Ireland last summer amid turmoil over Greece's debts.

A short position entails borrowing shares and selling them, with the hope that they can be bought back more cheaply at a later date and returned to the owner. While the potential return is determined by the amount of money recovered from the share sale, the potential loss is enormous if the shorted company's shares rise in value.

Odey, one of the best-known hedge fund managers in the world, made a killing out of the 2008 financial crisis after shorting British banks. He supported the 'Leave' side in the Brexit referendum, but has had a difficult year in 2016, with his Odey European Fund losing 31pc to the middle of April.

But Odey told Reuters after last month's referendum that he expected to make a gain of around 15pc because of the result, saying he was "feeling a lot happier".

George Soros, nicknamed "The Man who Broke the Bank of England", was one of the original investors when Odey set up his company in the early 1990s.

A spokesperson for Odey Asset Management did not respond to a request for comment. Bank of Ireland did not comment.

The bank is to publish half-year results on July 29. Davy analyst Emer Lang said she expected a 36pc year-on-year decline in earnings in a note circulated earlier in the week, citing weaker sterling and a decline in bond gains as the main drivers.

"Given the high degree of uncertainty post Brexit, outlook comments - particularly regarding management's ambition to re-instate dividends and its strategy for the UK business - will be closely scrutinised and will arguably be the key area of focus on July 29," Lang said.

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