Bank shares soared this morning, with Bank of Ireland leading the charge in the wake of announcements yesterday aimed at stabilising the banks.
By noon, Bank of Ireland was up 26.5 per cent to €1.63 despite yesterday’s revelations that it would need an additional €2.7 billion in capital this year.
The bank is due to transfer €1.93 billion in loans to the National Asset Management Agency (Nama) on April 2nd, at a 35 per cent discount. This is higher than the predicted 30 per cent haircut predicted in September 2009, but was the lowest applied yesterday to the five Irish-owned institutions moving loans to the agency.
The bank today reported an underlying loss of €2.9 billion for the nine months to December 31st 2009. The bank said pre-tax losses were €1.8 billion, while underlying operating profit before impairment charges was just over €1 billion, a 28 per cent fall from the same period in 2008. Impairment charges totalled €4 billion.
Traders saw the news as positive, with few surprises in the results.
AIB, meanwhile, rose as much as 9.2 per cent in early trading, before shedding some gains to trade at €1.26, a 1.2 per cent gain.
Minister for Finance Brian Lenihan yesterday said the bank would need to raise €7.4 billion in new capital before the end of the year. This could mean the State takes a majority shareholding in the bank if it could not raise the required capital from the sale of its UK, US and Polish businesses or from private investors.
Traders said this morning that the bank could raise up to €5 billion in capital from the sale of the assets.
Yesterday's announcements were generally viewed in a positive light by traders.
"Greater capital levels should help improve the banks' funding terms and enable them to gradually wean themselves off the government guarantee," Davy said in a note.
Irish Life and Permanent, which is not involved in Nama, gained 6.2 per cent to €3.01.
Construction stocks also gained, with Grafton up 2.6 per cent to €3.23, and Kingspan rising 1.8 per cent to €6.49. However, McInerney Holdings saw its stock slump 10 per cent to 15 cent.
