Irish Bank Shares Fall After Anglo Irish Nationalization
January 16 2009 - 6:29AM
Dow Jones News
Irish bank shares fell Friday, sharply underperforming the
European sector as the cost of insuring against bond default rose
following the nationalization of scandal-hit Anglo Irish Bank Corp.
(ANGL.DB).
Irish bank Credit Default Swap spreads were quoted tighter
across the board, with Anglo Irish bank five-year senior CDS around
250 basis points tighter, with subordinated CDS a huge 450 basis
points tighter.
Five year senior CDS written on Bank of Ireland and Irish Life
& Permanent were around 20 basis points tighter, while Allied
Irish tightened around 35 basis points.
The cost of insuring sovereign bonds issued by Ireland against
default also rose significantly.
At 1033 GMT, Allied Irish Banks PLC (AIB) shares were down
EUR0.25 or 13% at EUR1.69, Bank of Ireland PLC (IRE) down EUR0.04,
or 4% at EUR0.86, while Irish Life & Permanent PLC (APM.DB) was
EUR0.05 lower, or 2.2% at EUR2.20.
The Stoxx Europe 600 banks index was up 2.7%, buoyed by news
that the U.S. plans to provide Bank of America Corp (BAC) with an
additional $20 billion.
Anglo Irish requested that its shares were suspended Friday on
the Irish and London stock exchanges. The Irish government said
late Thursday it will take control of Anglo Irish to secure its
continued viability after taking hits from an accounting scandal
and the broader financial crisis.
Early Friday, Irish sovereign credit default swaps were quoted
at 240/290 basis points by one trader. Another trader said he had
seen the contract bid at 230 basis points but that there had been
no offers to sell protection during the morning.
The spread widening was in reaction to concerns that, by
nationalizing Anglo Irish Bank, the Irish government has increased
the amount of risk on its balance sheet.
"The nationalization of Anglo-Irish is yet another intervention
too many," said Societe Generale fixed income analyst Ciaran
O'Hagan, adding that governments need to be more selective in who
they rescue.
Company Web site: www.angloirishbank.ie
-By Vladimir Guevarra, Dow Jones Newswires, +44 (0) 20 7842
9486, vladimir.guevarra@dowjones.com
(Michael Wilson and Mark Brown contributed to this item)
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