IL&P shares rise 10% on Iceland debt details

Shares in Irish Life and Permanent have soared by almost 10 per cent in Dublin after the lender outlined its exposure to Icelandic bank debt.

At 2.51pm Irish Life and Permanent shares were up 15 cents at €1.67, a gain of just over per cent on the day. Its shares rose by over 44 per cent shortly after the statement was released.  

In a statement the lender said had approximately €95 million of investments in the three stricken Icelandic banks; Landsbanki Islands, Kaupthing Bank and Glitnir Bank. Of this €62 million is in euros and $42 million (€33 million) is in dollars.

Irish Life and Permanent said that by the end of June this year it had already written down €16.7 million of its investments in the Icelandic banks and "anticipates that it will create impairment provisions to cover substantially all the outstanding debt".

The bank did not disclose the individual amounts held in each of the Icelandic banks. Iceland was forced to take over its three biggest banks after they were hit by the credit crunch.

"The recovery, if any, of these debts due will be dependent upon action taken by the Icelandic government," the Irish Life and Permanent said. Irish Life said it can "absorb any impairment" on its exposure to the Icelandic banks without "placing the group under any capital strain".

The mortgage lender said it took the decision to outline its exposure ahead of its next interim management statement on November 12th due to "market interest in this matter".

Irish Life and Permanent's share price had come under severe pressure in recent days due to investor concern about its exposure to Icelandic bank debt.

Its shares plunged almost 30 per cent on the Iseq index yesterday and this followed a fall of over 30 per cent on Friday. The bank issued a statement on Friday saying its exposure was "very manageable" but this failed to calm markets.