BoI up 23% on debt buy-back boost

BANK of Ireland (BoI) was the star performer in Dublin trading, yesterday, rising by well over 20% on the back of announcing a partial buy-back of its debt at a discount in order to boost its financial strength.

The reporting of a €7m pre-tax loss – hampered by a €1.4bn bad loan impairment charge for the year to the end of March – the resignation of chairman Richard Burrows and a doubling in the percentage of its mortgage lending book that is in arrears, were not enough to damage the company’s share price as news of the potential cash boost was supported by claims from management that the bank is not in need of further Government funding.

Although a 30%+ rise in its share price ebbed slightly later in the day, Bank of Ireland managed to close at 1.34; up 26c – or 23.73% – on Monday’s close. Bank of Ireland has now overtaken its main rival AIB in terms of market capitalisation – it being worth €1.34bn to AIBs current market value of €1.02bn.

Each of the Irish banking stocks had a good day yesterday, a day when the overall combined ISEQ index was up by 3.87%, or 102.33 points, at 2,746.19 points, with AIB gaining 8c to close at €1.16 and Irish Life & Permanent (IL&P) improving by 7.25% in gaining 20c to a price of €3 per share.

FBD Insurance – which has just launched a marketing campaign aimed at boosting its profile in urban areas around the country – jumped by 22c to €6.35.

In non-financial stocks, cement and building materials giant, CRH soared by an impressive 69c – nearly 4% – to €18.60.

Improving customer numbers for its Tysabri multiple sclerosis drug helped Irish pharmaceutical company Elan’s share price, which rose by 30c, or over 6%, to close at €5.26.

Support services and distribution group, DCC saw its shares rise by 22c – or 1.52% – on the back of a solid set of full-year results and further international expansion through acquisition.

Good gains were also seen by Smurfit Kappa, Tullow Oil and Grafton Group.

Dublin was one of the few European markets to enjoy a solid percentage rise yesterday. London’s FTSE was up slightly by 36 points at 4,482, while the CAC in Paris crept up by 30 points to 3,275. The DAX in Frankfurt was the best performing of the big markets, finishing up by 102 points, or 3.8%, to close at 2,746.

In late trading the Dow Jones Industrial Average had slumped 29.23 points, or 0.3%, to 8,474.85.

The Nasdaq had gained 2.18, or 0.13%, to 1,734.54.