Banks fail to make any gains

NEITHER of the major Irish banks made any gains from their Friday closing positions further lessening their chances of making it into the Eurostoxx 50.

Any final decision will not be taken on the issue until the week-end when the market value of shares will determine who is in and who’s out.

If by then AIB has gained 4.9% on Lafarge, the only share likely to be dumped out of the Index, it will have to yield to AIB. Bank of Ireland looks to be out of the running due to the dip in its valuation in recent times.

However the decision by both AIB and Bank of Ireland to scrap their Information Technology joint venture may undermine rather than enhance AIB’s valuation in the next few days effectively hitting its chance of making it to the index, especially with the Dublin rumour mill suggesting that AIB may have pulled out of the deal to be unfettered in the event of a hostile takeover bid from Deutsche Bank or Royal Bank of Scotland.

Deutsche has been linked with a takeover of AIB in the past, but nothing ever came of it.

Royal Bank of Scotland which merged with Halifax in the UK some time ago was linked with the Irish market in another context recently when the Halifax was rumoured to be looking at the Irish mortgage market.

However, going on yesterday’s lack of interest in the Irish banks, it looks as if its chances of making the index has seriously declined.

Elsewhere in the markets, the US market slumped for the second day in a row.

Big name shares like AOL Time Warner, General Electric and the giant retailer Wal-Mart led markets lower in early trading. The fear is that the US recovery is destined to be slower than optimists previously thought and, as one analyst put it, “the slower recovery will crimp profit figures in the forthcoming quarters.”

By late evening the Nasdaq was down 1.36%; the Dow was off 1.09%; and the S&P was off just under 1%.

One analyst said the problem for the US markets is that valuations are still very high in may instances and investors are taking profit where they can get it, fearful that things may get worse before they get better.