Liams LAst Post : The Day after NAMA and Bank of Ireland emerge best relative to AIB

Good Afternoon ,

 

Well the day after the Bank news and Bank of Ireland results and finally the banks have share prices that have diverged…

 

I was struck by the language used by the minister yesterday in his speech with clearly a warmer tone towards BOI than AIB which seem to have remained on the wrong side of the Government throughout the process.  I noted also that the AIB statement last night thanked the support of the taxpayer rather than the Minister duriog the crisis. The taxpaying customer of course got rewarded by AIB by them raising their variable mortgage rates so thanks indeed.

 

Bank of Ireland was the real winner with a big jump of 24% in the share price , though the market is beginning to focus on the mechanics of the capital raising by both parties and ther will be certainly opportunities to buy any of these stocks during the transactions.  BOI are understood to be awaiting news from the EU before proceeding with their transaction and AIB have a month to put a plan together but they were told by the minister that they would immediately start the process of selling their UK , Polish and US assets. This is not negotiable.

 

So after a year and a half od analysts speculating , in a very short few minutes the regulator gave us the workings for each institution of how much capital they need. Now it is for the Institutions themselves to assemble their investment case and win investor support.

 

FBD gave up a little bit f ground as the Quinn group issued their statement saying the regulator was wrong. I don't think the public is in the mood to give tarnished reputations the benefit of the doubt over this. FBD is already attractively priced but if the Quinn insurance group under effective state control becomes less price competitive this will be very beneficial for FBD.

 

Irish Life was a disappointing performer today up just under 4% , I know they have been signalling that they are in discussion with the regulator and that they are likely to have to raise about 1bn to bolster the balance sheet of the Permanent TSB which is about 15om more than we had modelled and of course he third fore was not mentioned last night. But there was nothing too negative for Irish life and as Sebastian has always pointed out any capital injection should be valued at the value of the monies injected so there is still a lot of upside to the fair value of Irish life even looking ahead to it post recapitalisation.

 

Have a good evening .

 

Liam   

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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