Shares fall 5.57% after €2bn loss

SHARES in AIB shed 5.57% of their valueyesterday to 0.93 cent as investors reacted badly to the group’s €2bn losses for the first half of 2010.

For the six months to end June 2010, the bank’s Irish operations chalked up losses of €2.7 billion, reflecting the impact of its property exposure.

Overall, AIB suffered bad debt charges of over €3bn, made up of €963 million of losses on loans transferred to NAMA.

The bank also reserved another €2.3bn for other troubled loans on its books, including €1.2bn for loans due to transfer to NAMA this year.

That pushed the set aside for bad loans in the period up to over €3bn.

AIB is set to transfer €24bn to the bad bank in all and at discounts substantially higher than originally thought.

In the short term, trading conditions will remain tough, it said.

Before year end, the bank is faced with finding €7.4bn to fill boost its capital reserves.

AIB boss Colm Doherty said the planned sale of its overseas assets including operations in Poland, Britain and its minority stake in the US bank M&T was progressing, though the bank is restricted in saying anything due to the “strict confidentiality agreements” that are in place.

It expects to have shortlisted a number of buyers for its Polish and British operations by the end of September.

Non-AIB sources believe Spanish banking giant Santander could be the lead contender to buy the two businesses.

In the case of M&T, it has number of options including the sale of the holding to one purchaser.

Mr Doherty said that AIB also plans a rights issue in the last quarter of the year.

The amount raised will be critical to the Government’s holding in AIB, which stands at 18.6%.