The Irish Stock Exchange was a bloodbath today. The ISEQ index closed down 7.43 %, as indicated by the above graph. Specifically, AIB lost 58.62% and Bank of Ireland 54.67%. These are massive losses and suggest that the market has no confidence in their survival without complete nationalization.
All of these banks have a considerable amount of debt that is maturing within the 2-3 years. Especially Bank of Ireland as suggested by the below table
http://spreadsheets.google.com/pub?key=pkTuK8Mqkg-TXqYpr4ISmbA
But all banks are having great difficulty in financing any debt at present. As a consequence government is now entering the market place to plug these chasms.
Yet, against this terrible back drop, Irish banks are also getting hammered because international investors have lost complete faith in the financial regulator and central bank. This is lack of confidence was highlighted by the LEX in Saturday's Financial Times.
" Bank of Ireland and Allied Irish Banks may be marginally safer bets now that the government has removed the sector’s main systemic risk. Time, then, for Ireland’s cosy coterie of bankers and politicians to resume discussion of their golf handicaps in the club bars. But not for too long: neither bank has a price/earnings ratio of more than one, which speaks volumes about investor confidence in the sector’s prospects"
No comments:
Post a Comment