BANK OF Ireland shares dropped below the €1 mark for the first time in 16 years yesterday, falling by almost a quarter to 83 cent.
Shares in the bank, which was valued at just €833 million yesterday, have collapsed over the past 21 months, falling almost 95 per cent, or €17.4 billion in value, since they peaked at €18.65 in February 2007.
Anglo Irish Bank, which fell 13.9 per cent to close at €1.11, replaced the bank as the State's second-largest bank after AIB. Anglo was valued at €844 million yesterday.
Bank of Ireland's shares have been falling since Thursday when the bank scrapped its dividend and reported a 32 per cent drop in underlying pre-tax profits. The decision to cancel the dividend forced a sharp sell-off by investors who hold shares for the long term to earn income.
Investors also sold off shares after one of the bank's credit ratings - a measure of ability to repay borrowings - was placed on negative watch last week amid concerns about deteriorating loans and profitability.
Fine Gael said the sharp fall made the issue of injecting fresh capital into the banks "even more urgent".
"Today's large-scale sell-off of Bank of Ireland shares is yet more evidence of the dangers of the Government's wait-and-see approach to the banking crisis," said the party's finance spokesman Richard Bruton. "Too many small Irish businesses and Irish jobs are at risk from drying-up credit lines."
Bank of Ireland said last week that it had sufficient capital, which is essentially reserves of cash on the bank's balance sheet, to absorb projected higher losses on loans over the coming years. It added that it had no plans to ask shareholders or the Government for additional capital.
However, concerns persist about whether the banks can raise more capital to cope through the recession and property slump.
Analysts estimate that Bank of Ireland needs up to €1.7 billion in fresh capital to strengthen itself.
In another sign of the pressure in the sector, Swiss bank UBS set up a new system that could lead to senior bankers being fined or forced to repay bonuses if they underperform when the bank posts heavy losses.
Citigroup's decision to cut a further 50,000 jobs, or 15 per cent of its workforce, yesterday also pushed Bank of Ireland's share price lower. Citigroup employs 2,200 in Dublin and Waterford.