Banking, finance, and taxes
2010, The Year of Irish Banks! (IRE, AIB, IRL, STD, BBVA, NBG)
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If today’s price action is of any indication for the full year, it seems that 2010 may be poised to be the year of the Irish banking sector. Today’s big winners were not just banking stocks, but they were specifically the Irish banking stocks. Shares of Irish financial stocks traded higher in New York (and local markets overseas) after reports that Finance Minister Brian Lenihan has said that he plans to stay as Finance Minister while he receives treatment for pancreatic cancer. Lenihan is considered a prominent figure helping to oversee Ireland’s financial recovery. The Bank of Ireland (NYSE: IRE) NYSE-listed ADR was up 17% at $8.97 as of 1:00 PM EST. At the same time, Allied Irish Banks plc (NYSE: AIB) was up over 15% at $4.05. This even had the The New Ireland Fund, Inc. (NYSE: IRL) closed-end mutual fund up 2.66% at $7.29 today versus the Irish exchange, the ISEQ, up 122.83 points at 3,097.76 on the day for a gain of close to 4%. It seems that Ireland was alone in the joy compared to other troubled European market banks.
Lenihan had apparently noted that public finances are recovering, and also noted that both Bank of Ireland (IRE) and Allied Irish Banks plc (AIB) may need government-backed funds. In short, it doesn’t sound as though the regulators in Ireland are hellbent on wrecking the sector with a 3.5 billion Euro investment in each bank for 25% stakes. There were already reports in December that Allied Irish Banks was going to raise capital in 2010, so today may be more of a formal nod of approval despite some existing woes.
We wanted to see if some of the other trouble spot banks in Europe were higher today, but not anything at all like what we saw in Ireland. In Spain’s largest bank, Banco Santander, S.A. (NYSE: STD) was up ‘only’ over 3% at $16.95, versus a 52-week range of $4.87 to $17.89, after reports last week that Spanish banks are finally starting to unload property portfolios. Its rival bank of Banco Bilbao Vizcaya Argentaria, S.A. (BYSE: BBVA) was up 3% at $18.60 per ADR today. Greece is in perhaps deeper financial trouble with ratings agency turmoil, yet National Bank of Greece SA (NYSE: NBG) was hardly moved today. Shares were up only 0.4% at $5.23 versus a 52-week trading range of $2.09 to $8.37 for the ADR.
To show how crazy the Irish banks have been, Bank of Ireland (NYSE: IRE) share price of $8.97 compares to a 52-week trading range of $0.66 to $20.18. Allied Irish Banks plc (NYSE: AIB) share price of $4.05 compares to a 52-week range of $0.72 to $10.42. That closed-end fund called This even had the The New Ireland Fund, Inc. (NYSE: IRL) with a $7.29 price has a 52-week range of $3.22 to $8.75.
If these banks can poise serious recoveries and recapture any of their former glory for investors, Ireland might change to Irelend.
JON C. OGG
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