Cowen says Anglo an 'important commercial entity'

Shares in Anglo Irish Bank have continued to fall today as the Dublin market responds to the bank's effective takeover by the Government over the weekend.

The share price fall comes after the Taoiseach Brian Cowen this morning described Anglo Irish Bank as "important" to the Irish economy. At 1.15pm Anglo Irish shares were 20 per cent lower at 24 cent.

"Anglo-Irish continues to be an important commercial entity which has served the country and customers very well down the years in terms of commercial banking," Mr Cowen told RTÉ's Morning Ireland.

“We are indicating our preparedness to make a substantial investment and we believe it will continue on and will be in a position to return that money to the taxpayer in due course.”

Asked about the fall in the bank’s share price yesterday following the Government’s recapitalisation programme Mr Cowen said the fact that the State was taking a 75 per cent stake generated a reaction in the markets.

“It’s important to point out those shares will continue to trade and continue to change, hopefully upward in due course.”

The Taoiseach said the important point was that “all our banks need capital adequacy ratios that are necessary for our regulatory requirements. This further investment of capital improves that situation even further. That will help send a very positive signal to stock markets.”

Shares in the two other banks included in the Government’s recapitalisation programme; AIB and Bank of Ireland (BoI) were ahead midday with the former adding just under 9 per cent to €1.82. BoI shares were marginally ahead at 90 cent.

The market delivered a cautious welcome to the plan yesterday with Bank of Ireland (BoI) gaining 32 per cent while AIB added 1.2 per cent. However, Anglo Irish shares fell 14.3 per cent.

The recapitalisation plan has not prompted the ratings agencies to alter their view on the Irish banks. Last night Fitch indicated it would retain its negative ratings watch on AIB, Anglo and BoI.

In a statement yesterday Moody's said it would continue with its review of the banks for a possible downgrade based on the expected further deterioration in asset quality and the rapid decline in property valuations.

However, Moody's said the severity of any downgrade “may be reduced” by the capital injections. Moody's also said it regards non-equity capital as lower quality than equity capital.

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