Anglo shares plummet as BoI courts investors

THE outlook for Anglo Irish Bank’s surviving as a standalone entity deteriorated further yesterday as its shares plunged about 28% for the second day in a row.

The fall sent the shares tumbling to 48 cents yesterday following projections the bank will return losses for the next two years.

Concerns have also emerged that the core ratio of the bank is not as strong as indicated by the group when it published results on Wednesday, and that it will need much higher levels of external funding than had been estimated.

The bank’s difficulties worsened after NCB Stockbrokers said the bank will make losses in the next two years. In a note brokers said the bank will make losses of 22 cents a share in the year to 30 September 2009, followed by a loss of 32c the next year.

NCB had previously forecast profits for both years.

The brokers fear that bad debts will be significantly higher than forecast by Anglo, which wrote off €224m in bad debts last year and set aside a further provision of €500m against future write offs.

The analysts said bad debt provision could be as much as 2.34% of total loans in 2009 compared with Anglo’s forecast of 1.2%.

Analyst Alex Potter of Collins Stewart yesterday described results as “weak” and said the asset quality was “deteriorating fast”.

Meanwhile it has emerged that private equity firm Apax Partners is looking at taking an investment stake in Bank of Ireland.

Apax was the missing link in the chain of international equity houses named as potential investors in the group. The Mallabraca bidding consortium of JC Flowers and Carlyle Group, have been linked to a proposal to take a 60% stake in bank. It is thought that US buyout groups TPG, KKR have also made offers.

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