DERMOT DESMOND’S investment vehicle IIU Nominees is nursing a big loss on a stake it acquired last January in Bank of Ireland, an institution he has criticised for appointing an internal candidate as chief executive.

The Bank of Ireland investment by IIU Nominees came within days of an investment it made in Allied Irish Banks (AIB). The vehicle’s separate investments in the two banks, estimated at a combined value of more than €16 million at the prevailing closing price on the day IIU Nominees first appeared on their share registers, are now worth some €4 million.

Bank of Ireland’s share register indicates that IIU Nominees acquired 8.9 million shares in the institution on January 6th, giving the IIU vehicle a shareholding of a little less than 1 per cent. The Allied Irish Banks (AIB) share register shows that the Bank of Ireland deals came four days after IIU Nominees acquired 5.1 million AIB shares, giving the vehicle 0.58 per cent of that bank.

Amid international turmoil and volatility in the market for Irish bank shares following the nationalisation of Anglo Irish Bank in January, the shares of both institutions have lost significant ground since then. As a result, numerous small and large-scale shareholders have seen their investment virtually wiped out.

Bank of Ireland shares closed on January 6th at 88 cent, valuing the IIU Nominees stake at €7.83 million. The same shares, which have traded as low as 12 cent this month, closed 0.7 cent weaker yesterday at 20.8 cent. This values the IIU Nominees stake at €1.85 million, down almost €6 million.

AIB shares closed on January 2nd at €1.71, valuing the IIU Nominees stake at €8.72 million. The shares, which reached 27 cent earlier this month, closed 4 cent stronger yesterday at 44 cent. This values the IIU Nominees stake at some €2.24 million, down almost €6.5 million.

The declining share price of both Bank of Ireland and AIB comes in spite of Government plans to recapitalise both banks to the tune of €3.5 billion each in the coming weeks. Each bank’s shares have lost well in excess of 95 per cent in the past year.

Last week Mr Desmond criticised Bank of Ireland’s appointment of Richie Boucher as chief executive in succession to Brian Goggin, arguing that the appointment of the head of its Irish operation to the top post sent out “completely and utterly” the wrong message. While the bank responded by inviting Mr Desmond to meet its governor Richard Burrows, it said Mr Boucher was the “unanimous choice” of its board.

In a letter to Mr Burrows, Mr Desmond expressed his “dismay” at the appointment. “Before I decide on my next move, I would like to clarify whether Mr Boucher had a major involvement in the bank’s exposure to property lending.”

He said Mr Boucher was one of the most senior bankers in the organisation. “Therefore [he] must have been responsible for fatal errors of judgment, including advancing loans to developers on the strength of overstated land values and insufficient security.”

There was no response from IIU when contacted last evening.