AIB shares fall 9% over moves to nationalise

AIB’s share price dropped by almost 9% yesterday, on the back of speculation that the Government could move to nationalise the bank before Christmas and a fresh credit downgrade.

While the Government’s stake in the country’s largest bank is still technically around 18%, an increase to near total ownership has been viewed as being only a matter of time, in order to bring the bank up to fresh capital standard levels.

However, media reports over the weekend suggested that the move could be made this week and could also see the slightly surprising move of the State taking full control of AIB, leaving no element of it still listed on the Irish Stock Exchange. The bank was declining to comment on the reports, yesterday, as was the case with the Department of Finance.

AIB’s share price fell by just under 9% to 41c, yesterday, also not aided by a fresh downgrade by international credit ratings agency, Moody’s. After its downgrade of Ireland’s sovereign debt, last week, Moody’s has now lowered its ratings on five Irish banks — the NAMA-related four of AIB, Bank of Ireland, EBS Building Society and Irish Nationwide Building Society and Irish Life & Permanent (IL&P).

The other quoted Irish banking stocks also slid, yesterday, with Bank of Ireland down by 1.25% to 32c and IL&P shedding 5% to close at 91c.

The ISEQ, as a whole, crept upwards marginally by 0.5% to 2,835 points. This trend was mirrored across the main European markets; with London, Paris and Frankfurt all up slightly on Friday’s close.

AIB has also reported the transfer of further loans to NAMA — relating to a further 217 customers — totalling €9.3bn, at an aggregate discount of 59%.

In updating on its progress yesterday, NAMA chairman Frank Daly said that the agency has completed the acquisition of the original 11,000 loans from 850 debtors, with a nominal value of €71.2bn at a discount of 58%, meaning it has paid €30.2bn worth of bonds in exchange.

Mr Daly added that NAMA is preventing the transfer of €130m worth of assets, which developers had tried to put beyond the reach of the agency or the relevant banks; the assets now set to be used to support the execution of the agreed business plans.

NAMA has concluded its review of business plans from the top 30 property developers accounting for around €27bn of the acquired loans.

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