Predictable fall for banking stocks
The bank’s fall on the back of nationalisation speculation earlier in the week went into overdrive yesterday, with AIB down a further 21% as the Government announced a further bailout injection of €3.7bn and an ownership of almost 93% once the sale of the bank’s Polish operations is concluded.
By the close of business, AIB’s stock had rallied ever so marginally, but was still down by 19.8%, or 8c, to 32c.
The other two banking stocks also dropped — Bank of Ireland by nearly 1.5% to 34c and Irish Life & Permanent (IL&P) by 4.3% to 95c.
Elsewhere, though, there were good gains for the likes of support services giant, DCC; exploration company Dragon Oil; Elan and FBD.
Paddy Power — which announced its intention to buy the remainder of Australian online betting company, Sportsbet — rose by 47c to €30.80.
The ISEQ, itself, was virtually unmoved on an overall basis — down by 3.5 points to close at 2,882.
There was mixed news on the main European markets, with both the CAC in Paris and the DAX in Frankfurt down slightly, but the FTSE in London enjoying another day of gains.
Q: What does the future hold for private shareholders in AIB?
A: Shares will trade on the Irish Stock Exchange until January 25, 2011
Q: What happens after that?
A: AIB’s listings on the Irish Stock Exchange’s main market and the London Stock Exchange will cease.
It will then apply for a listing on the ISE’s secondary market allowing shareholders ongoing access to a public trading facility for their shares.
Q: What will the affect of that be?
A: This allows shareholders to sell their shares on if they wish and allows them to claim any losses suffered in the transactions against previous Capital Gains.
Q: What happens to people’s accounts?
A: The day-to-day functioning of the bank has not changed from a customer view.
Q: What about the guarantees by the state?
A: The policies in place will remain as previously outlined by the Government.
Q: What could change?
A: The Finance Minister has far reaching powers over the next two years to drastically reduce the size of the bank.
Q: Will the cost of banking go up?
A: The shift to state control in the bank should not have an immediate impact on the cost of banking. But Bank of Ireland has moved to impose charges on current account customers.
In that sense, basic survival could see the cost of bank transactions being increased.
Q: What will the future AIB look like?
A: The minister intends to cut AIB back to being a local bank serving Irish customers.
That has serious implications for jobs as subsidiaries are sold on or parts of the group’s domestic business are sold on to reduce the exposure of the bank. Job losses are inevitable.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
