The collapse of the Elan share price is a major blow to Irish pension funds, knocking their value by many millions of euro.

One rough estimate last night was that two weeks ago Elan shares could have made up more than 2 per cent of the value of the share portfolios held by Irish investment institutions. The share price has dropped by more than half in the past two weeks.

Shares quoted on the Dublin exchange make up 18 per cent of the portfolios of Irish institutions. One month ago Elan made up 22 per cent of the total capitalisation of the Dublin market.

In the normal course of events the size of a company's market capitalisation as a percentage of the Dublin market would be reflected in its size in an instutition's portfolio. In other words, a company which made up 10 per cent of the total capitalisation of the Dublin market would be expected to constitute 10 per cent of an institution's Irish investment.

However, because of Elan's size on the Dublin exchange, it is understood most funds had an exposure to Elan which was significantly less than would be indicated by this rule.