Ireland, E.U., IMF, Bailout Dusts Banks (IRE, AIB, RBS, LYG, IRL)

Banking, finance, and taxes

Published: November 22, 2010 8:44 am

Last Updated: April 27, 2020 11:50 pm

Ireland may be on the road to salvation after an E.U. and IMF bailout and that may be lending further support to the Euro. Just don’t look for the love to be put into Ireland’s two key ADRs of its US-traded banks. The Bank of Ireland (NYSE: IRE) and Allied Irish Banks plc (NYSE: AIB) are getting smacked right on the chin in this bailout.

Ireland’s finance ministers have said that the banks will need more capital, and they also said that a further shrinking of the operations and balance sheets will be needed. At issue for the banks is that the new capital requirements are not yet set. These new rules will be mandated after further stress tests are made. This is beginning to feel like TARP 16 or Financial Groundhog Day.

Two non-Irish banks also find themselves in the mix here. Royal Bank of Scotland Group PLC (NYSE: RBS) has close to $100 billion equivalent of Ireland exposure and Lloyds Banking Group PLC (NYSE: LYG) has closer to $50 billion equivalent in loan exposure in Ireland.

Allied Irish Banks plc (NYSE: AIB) is down 11% at $1.09 and The Bank of Ireland (NYSE: IRE) is down 17.5% at $2.20. Royal Bank of Scotland Group plc (NYSE: RBS) is down 4.5% at $12.79 and Lloyds Banking Group plc (NYSE: LYG) is down 4.7% at $4.07.

We are still waiting for trading in The New Ireland Fund, Inc. (NYSE: IRL).

JON C. OGG

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