The tables were turned in the respective fortunes of the two main banks yesterday as AIB faltered on the news that it may be excluded from the Dow Jones Eurostoxx-50, a key international index, under a new structuring and Bank of Ireland rebounded in a late deal after its unpopular merger discussions with Alliance & Leicester fell through.
The expectation is that Bank of Ireland's price will recover further on the news today while its management lick their wounds and rethink their future merger strategy. A late deal at E$17.50 (£13.78) was put through on the news, representing a 7 per cent increase on Monday's close of €16.30 (£12.84) and pushing the ISEQ up by 0.2 per cent.
AIB, which blossomed recently on foot of its entry into the Singaporean market, suffered a decline in early trading, falling 5 per cent from €13.10 (£10.32) to €12.50 (£9.84). Based on the proposed new ranking on the Dow Jones Eurostoxx-50, AIB would need to increase its market capitalisation by about 50 per cent, from its current €11.5 billion (£9 billion) to more than €16.6 billion (£13 billion) to be included in the top 50.
Of the other financials, Irish Life & Permanent drifted back 25 cents to €11.10 (£8.74). One dealer suggested the downward pressure on some stocks may be due to some investors gathering liquidity to invest in Telecom Eireann shares. Anglo Irish was back the equivalent of 2 cents, from €2.60 to £1.68 sterling and Hibernian was unchanged at €7.75 (£6.10). On an otherwise quiet day, CRH was up 22 cents, from €17.48 (£13.77) to €17.70 (£13.94) and Smurfit was up 3 cents to €2.65 (£2.09). Grafton was unchanged at €19.50 (£15.36) and Independent was 5 cents down to €4.85 (£3.82).
Among the food stocks, Kerry was unchanged at €12.10 (£9.53), Fyffes eased back 3 cents to €2.17 (£1.71) and Greencore was back 5 cents to €3.35 (£2.64).
