Bank shares soar on NAMA buyout
The dramatic surge came as Taoiseach Brian Cowen denied that NAMA represented a bailout for bankers and developers who had caused the problem.
But Fine Gael leader Enda Kenny said the share price increase indicated otherwise, and claimed taxpayers had been mugged by the financial markets and the Government.
The markets gave a clear thumbs-up to NAMA, with the Irish stock exchange ending the day up more than 3% yesterday at 3,469 – its highest closing level for almost a year and its biggest gain in two months.
AIB was up 28% at €3.37, its biggest gain since January.
Bank of Ireland soared almost 18% ahead at €3.38 but Irish Life and Permanent fell 0.76% to €5.85.
Fifty-seven million shares were traded in AIB and Bank of Ireland yesterday, compared with around nine million on a normal day.
AIB is now worth about €2.9bn compared to a worth of €14.3bn two years ago. Bank of Ireland's value has fallen from €11bn in September 2007 to €3.4bn today.
Raul Sinha, an analyst with financial group Nomura, said NAMA has ended months of uncertainly.
“With NAMA, investors can be assured that the losses will be fixed at 30%. That gives them some certainty about the earnings from the banks and that removes some of the discount valuation.”
Speaking as the Dail debate on the legislation to establish NAMA continued, Mr Cowen denied that it was a bailout.
“NAMA is not designed to be and will not be permitted to operate in practice as a bail-out mechanism for anybody who has operated irresponsibly,” he said.
But Mr Kenny claimed NAMA represented the “economics of the madhouse” before suggesting the people of Ireland, with the assistance of the Government, had been mugged by the financial markets.
“Despite all of this, the Government still wants us to believe that it makes sense for the State to fork out billions of euro to overpay for toxic assets.”
Mr Kenny also criticised the Greens for claiming last week that the banks would take a 50% share of the risk in NAMA when their actual risk would amount to just 5%.
“Somewhere along the way, a zero went missing. If anyone finds it, send it to the Green Party promptly,” Mr Kenny said.
But Green leader John Gormley insisted his party would be seeking further improvements to the bill as it made its way through the Oireachtas.
The sharp exchanges came as the likelihood of an Oireachtas inquiry into the causes of the banking crisis receded.
The powerful Dáil Public Accounts Committee met yesterday to discuss the issue but found a banking inquiry fell outside its remit.
To facilitate an inquiry, the committee’s terms of reference would have to be changed by legislation.
But committee members felt there was little prospect of the Government agreeing to such legislation.
