AIB shares up on news state aid is last resort
SHARES in Allied Irish Banks soared yesterday as investors digested the company's reassurances earlier this week that it is looking at options to replenish its capital, with more state help a last resort.
Shares in the bank closed up 19.8pc at €1.25 in Dublin last night, outperforming every other stock on the ISEQ and marking the bank's biggest one-day gain since September. Shares in rival Bank of Ireland jumped 9.6pc to €1.09.
"It must be a positive reception to the plans they are outlining to recapitalise the bank," said Sebastian Orsi, an analyst at Merrion Capital Group in Dublin.
"The share price is volatile and it wouldn't take much to move it in these markets."
The bank said on Tuesday that it would try to sell assets or a stake in the group before approaching shareholders or the Government for further capital, aiming to ease concerns it might need a further cash injection. "We understand from our shareholders that they want us to release capital from our business before we go back to them," managing director Colm Doherty told analysts after the bank posted its first ever full-year net loss.
Finance Minister Brian Lenihan reiterated last Friday at the Institute of Taxation that he is opposed to 100pc state ownership of the bank which would entail removing the bank from the stock exchange.
Mr Doherty told analysts that several other banks are interested in buying a stake in AIB.