Renewed hopes for Brexit trade deal add €660m to value of AIB and Bank of Ireland

Renewed hopes for Brexit trade deal add €660m to value of AIB and Bank of Ireland

UK prime minister Boris Johnson in Brussels with European Commission president Ursula von der Leyen where they tried to reach a breakthrough on a post-Brexit trade deal.

Hundreds of millions of euro were added to the value of a handful of Irish companies most exposed to the fallout of a hard Brexit as the EU and British trade talks got back on track.

The gains for shares in AIB, which climbed 8% at one stage, and Bank of Ireland, up 9%, surpassed their one-day gains last month when Pfizer and BioNTech announced extraordinary results of their Phase 3 trial for a Covid-19 vaccine.

Between them, AIB and Bank of Ireland gained around €660m in Monday's session after the EU and Britain agreed to extend their talks during the weekend. The two main Irish banks are proxies for the Irish economy and the potential for harm from a no-deal Brexit, while Bank of Ireland also has a significant lending operation in Britain through the post office there.           

Irish transport shares, which are also at the front line for any Brexit-driven slump in the value of sterling, also rallied. Ryanair gained 2.6% in Dublin, while shares in IAG, the Aer Lingus owner, rose 1.7% in London. Airline shares had already soared last month on the vaccine news. Shares in ICG, which owns Irish Ferries, also ticked higher, by 1.5%.         

Sterling rose to 90.8p against the euro, marking mixed news for Irish consumers. A stronger sterling nonetheless lessens the pressure on Irish exporters, including the agri-food businesses which employ hundreds of thousands of people, because it makes selling into Britain less expensive. 

The positive tone over the trade talks also had no fallout for yields or interest rates of Irish bonds. The Irish 10-year bond continued to trade at historic negative lows at below -0.3%, meaning that the Government can borrow at no cost.

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