IRISH bank shares soared yesterday following news that one of the world’s most renowned investors is showing interest in their assets.
J Christopher Flowers, founder of New York private-equity firm JC Flowers, signalled he is continuing to look for Irish banking assets and, on Friday, he said to Bloomberg: “If we can find the right opportunity to invest in Ireland, we would like to do that.”
Yesterday, Bank of Ireland closed up 13% at 36 cent, while AIB was up 10% at 38 cent. On a day the ISEQ closed up 0.6%, Irish Life and Permanent also rose by 3% to close at €1.02.
JC Flowers had been bidding for EBS Building Society, according to reports. He said a stake in AIB or Bank of Ireland may be attractive, depending on government guarantees on potential losses from toxic assets. He also said buying asset portfolios at discounts with government support might be a more appealing investment in the short term.
“Potential acquirers are likely to want to purchase” Irish banking “assets at a discount to book value, even with the loan loss guarantees and this could drive up further capital requirements in Irish banks,” said Ken Darmody, analyst with Goodbody.
In Britain yesterday, stocks also rose. The gauge has now rallied 10% since the end of August.
European finance ministers gathered in Brussels for their monthly meeting yesterday, as officials voiced divisions over the steps needed to stop the sovereign debt crisis, after contagion spread from Ireland and Greece.
Belgian Finance Minister Didier Reynders said the region’s €750 billion bailout fund might be expanded if ministers decide to introduce a larger permanent facility when the current temporary one expires, breaking ranks with Chancellor Angela Merkel and France’s Nicolas Sarkozy.
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