Good Afternoon
Markets rallied at the of this morning having opened well below yesterday's levels, Markets saw their highs at about 1pm then basically gave up al the gains in a straight line dive this afternoon.
There were two significant pieces of news in Ireland today. Firstly Bank of Ireland announced the measure s they are committing to ahead of a decision by the EU re their new business strategy and the actions they have to take to satisfy the EU requirements. They committed themselves to disposals including the New Ireland Life Assurance business (c.19% market share), Bank of Ireland Asset Management (c.€25B of AUM), and ICS Building Society (the disposal might include €2B of mortgage loans and €4B of deposits) as well as some smaller businesses (US f/x business FCE, Paul Capital and the Irish Credit Bureau). Additionally, BoI has reiterated that it will commit to winding down its broker originated UK mortgage book (c.€30B) and the c.€4B international corporate lending portfolio. Looking at the potential disposals, BoI indicates that the businesses included c.€7B of loans, €4B of deposits, and represented c.€0.9B of risk weighted assets. For the 9 months to the end of Dec 09, BoI estimates the potential disposals generated c.€200m of revenue, €90m of pre-provision operating profit and €40m of underlying pbt. The restructuring measures are expected to be implemented over the period to Dec 2014. The potential disposals would reduce fee based income streams but would reduce normalised profit forecasts by less than 10%.
The second important piece of news was that Denis O'Brien has raised his stake in INM and has overtaken the O'Reilly family as the largest shareholder. The market will look now at what O'Briens long term interests are in the company and also to see if the O'Reilly family can find the money to increase their stake to match the level of O'Brien. Denis O'Brien's moves to an 18.6% stake from 13.8% . INM shares were up a further 5% today.
The Airline bad news due to the Volcano put European airlines under pressure and may have created a buying opportunity in Aer Lingus with the stock down -3.4% on the day.
CRH was a notable performer to day, it has been a laggard despite the dollar strength recently and CRH moved sharply when a London bulge bracket broker identified it as a potential opportunity. CRH rallied +3.6% today.
Markets closed on a low today in Europe and the Dow looks like it might slip once again below the 11000 level.
Have a good weekend
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
www.merrion-capital.com
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Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.
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