Page last updated at 15:28 GMT, Monday, 19 January 2009

Irish bank shares plunge in value

Anglo Irish Bank
The government is pressing ahead with nationalising Anglo Irish

Shares in Ireland's three remaining publicly-listed banks have plunged following the nationalisation of Anglo Irish Bank.

In afternoon trade, Allied Irish shares were down 62%, Bank of Ireland fell 49% and mortgage and insurance specialist Irish Life & Permanent dropped 41%.

Investors are worried about all three firms' exposure to Ireland's slumping property and construction markets.

Parliament will start debating the bill to nationalise Anglo Irish on Tuesday.

Analysts said shares in Allied Irish and Bank of Ireland were being hit particularly hard because of growing investor fears that the banks' existing shares will be heavily diluted when both banks formally accept billions in government investment this spring.

Nationalisation plans

Last week, Finance Minister Brian Lenihan announced plans for a government takeover of Anglo Irish, and its shares were suspended.

Shares in the Dublin-based bank had fallen 98% over the past year on the back of bad debts and corporate scandal.

The government had previously proposed taking a 75% stake in Anglo Irish at a cost of 1.5bn euros (1.36bn; $1.97bn).

But it dramatically opted for a full takeover on Thursday, on the eve of an emergency shareholder meeting called to approve the earlier government investment.

International confidence in Anglo's debt management plummeted last month after investigators revealed that then-chairman Sean FitzPatrick had hidden the value of his personal loans from shareholders.

Friday's shareholder meeting heard that Mr FitzPatrick had borrowed up to 127m euros, but hid these debts from the bank's external auditors for eight years.

Five Anglo Irish directors resigned from the board on Monday, joining Mr Fitzpatrick and two other directors who had already resigned.

The government is expected to fill the board positions soon.

While Ireland's parliament will start debating the bill nationalising Anglo Irish on Tuesday, the government is still revising its contents.

It has now dropped a controversial rule restricting the ability of its biggest depositors to withdraw funds if they also have outstanding debts at the bank.

That measure had appeared to be targeted at Anglo Irish's biggest shareholder, billionaire entrepreneur Sean Quinn, whose family owns 15% of the bank's shares.

The government has denied claims from opposition lawmakers that it had dropped the plans under pressure from Mr Quinn, whose Irish companies make concrete and other building materials, run hotels, and sell insurance.

Bank of Ireland's chief executive, Brian Goggin, also announced on Monday he would step down this summer. He originally planned to retire in 2010.

Bank of Ireland governor Richard Burrows said Mr Goggin wanted "to make way for fresh leadership to take Bank of Ireland through the challenges which lie ahead".

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SEE ALSO
Irish bank set to be nationalised
16 Jan 09 |  Business
Anglo Irish Bank faced going bust
16 Jan 09 |  Business
Anglo Irish bosses forced to quit
19 Dec 08 |  Business
Irish banks to be recapitalised
14 Dec 08 |  Business
'No advantage' for Irish bankers
02 Oct 08 |  Business
Irish bank scheme may be extended
01 Oct 08 |  Northern Ireland

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