Banking stocks buoyed by budget plans

MOVES by the Government to do something positive about bad bank debts and tighter regulation of Ireland’s financial institutions in yesterday’s supplementary budget had an initial positive effect on the Irish market yesterday, with banking stocks having another good day as investor confidence held up.

As part of his wide-reaching emergency budget, Finance Minister Brian Lenihan announced details of how he proposes to reform the Central Bank and establish a home for bad banking loans. The new National Asset Management Agency, to be controlled by the National Treasury Management Agency (NTMA), will take bad debts off the balance sheets of the country’s leading banks.

In part response to these measures, Bank of Ireland saw its share price jump by another 8c yesterday to reach 96c, bringing it ever closer to the €1 mark it has languished beneath for some months now.

The country’s largest bank, AIB was up by another 9.4% — 11c — at e1.28, again continuing on good gains made on Monday. Irish Life and Permanent (IL&P) was, again, the only one of the three quoted banks to fall yesterday — albeit managing to claw back some of its earlier losses to fall by 4c to e1.65.

On a whole, the ISEQ share index was down for the second day this week — yesterday by 1.21% — or nearly 28 points (not dissimilar to Monday’s fall) — to 2,273.19 points.

Outside of the banks, Smurfit Kappa — the international paper and packaging group — rose by 5c to close at e1.51. Elsewhere, it was another tough day for many of the high-profile losers from Monday — CRH, Tullow Oil, DCC, FBD and Elan all falling further. Paddy Power shed another 40c to e3.05.

News that the eurozone slipped further into recession last year than had previously been thought, along with downbeat growth forecasts in the leading Asian economies, led to widespread declines in stock market values around the world.

There was another 1.6% fall on the FTSE in London, which closed at 3,931 points yesterday. The CAC in Paris was down by just under 1% to just over 2,900 points, while the German DAX was down by just over 0.5% at 4,325 points.

Fear of pending poor first-quarter earnings figures from a range of financial institutions led a fall in the main US exchanges, with the Dow Jones in New York, down by nearly 2% at 7,824 points.

The technology-weighted Nasdaq fell by 2% to 1,286 points.


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