BoI shares rise as buyback welcomed

SHARES in Bank of Ireland gained a further 9c to €10.09 in trading yesterday as markets responded to the latest share buyback initiative.

A senior analyst said the best thing Irish banks could do for shareholders was to stay well away from future acquisitions.

Expanding his theme he said: “The only one that has been a real success has been Royal Bank of Scotland’s take over of Nat West and Irish banks are light years behind Royal Bank of Scotland,” he said.

Both of the major banks, AIB and Bank of Ireland had disastrous experiences in the US said the broker.

Both were very good banks in their own right but the investment community will breathe a sigh of relief if the banks grow organically and keep away from major overseas acquisitions for the foreseeable future.

Bank of Ireland’s shares rose by 4% (40c) on Thursday to €10.00 on news the bank had launched another rolling share buyback with the purchase of 275,000 shares.

They were bought on Wednesday at €9.5183 per share resulting in the 40c increase on Thursday and the further 9c gain yesterday. Share buy backs have been features in both AIB’s and Bank of Ireland’s strategies for several months and the policy has been openly welcomed.

Merrion Capital said the Bank of Ireland move would ease concerns in the market that the bank was accumulating a war chest to fund a major acquisition in Britain.

In a recent note on the company Len Riddell of Goodbody Stockbrokers said the bank looks to have surplus capital of €680m.

It now looks as if the bank will deploy a considerable amount of this to buy back more shares and add to the bank’s earnings and dividend payments down the line.

AIB also looks to have satisfied market concerns about its overall strategy and its shares rose 9c to €12.96 yesterday.