AIB near to ending share buy-back

AIB, the country’s largest bank, is nearing completion of its share buy-back, following a further €80m purchase of its shares.

Brokers believe that, with over 90% of the process completed, the bank may withdraw form the market.

Bank of Ireland, however, has purchased just 1.3% of its shares in the market in 2003. They have shareholder approval to buy up to 10% of the issued equity.

Stuart Draper of Dolmen Butler Briscoe, who has recommended B of I as a buy, following their recent annual results, expects the bank to return to the market to buy up more shares.

During the closed period, in the run-up to the publication of results last week, it was barred from entering the market to purchase its shares.

Now it has a two month window in which to retrieve some of its equity, which Mr Draper expects the bank to do. Bank of Ireland has the capital to exercise that option.

In Dublin yesterday, both shares were down, as markets ran scared following the suicide bombings in the Middle East.

AIB dropped 24 cent, or 1.7%, in early trading to €13.36, while Bank of Ireland’s shares fell by over 2% to €11.32.

AIB bank announced yesterday morning it bought 5.77 million shares last Friday at a price of €13.657 per share, at a total cost of €78.76m.

This followed a previous splurge on Thursday, when the bank also spent €80m buying shares.

AIB has now dished out more than €230m since it recommenced the share buyback programme on May 8, having begun the process in February.

Bank of Ireland did its initial 1.3% buy back between mid-February and mid-March and it is expected that further incursions into the market will boost its share price, provided markets do not contract as a result of the new wave of global anxiety following recent suicide bombings.

Given the rationalisation in Britain, the marketsexpect B of I to produce earnings growth of between 5% and 7% in the next two years and a share price target of €12.50 looks reasonable, said Mr Draper.