Stock Exchange suspends trading in Irish banks
Share trading in Irish banks will be temporarily suspended on the Irish Stock Exchange from tomorrow morning, it has been announced.
The announcement comes ahead of tomorrow’s announcement of the results of the Central Bank’s stress tests on the institutions at 4.30pm.
It is expected to say that Irish banks need about another €30bn to remain in business.
“The Irish Stock Exchange has informed the Central Bank of Ireland that it has filed two suspension notices concerning the shares in Bank of Ireland and Allied Irish Bank,” said a Central Bank statement.
According to the statement, the move is designed to “avoid the possibility of a disorderly market due to the circulation of information or rumours during the day and recognising that the banks may not comment on such information or rumours ahead of the Central Bank announcement”.
The statement continues: "The listing and trading of the above-mentioned securities have been temporarily suspended with effect from 6.30am, March 31, 2011 pending that announcement and any subsequent related announcements by the banks concerned."
The losses in Allied Irish Bank (AIB), Bank of Ireland, Irish Life and Permanent (IL&P) and the EBS building society will be set out as the new coalition Government attempts to finally measure the debt mountain.
Most of the loan losses caused by reckless lending to now bankrupt property developers. More than 44,000, or 5.7%, of homeowners are at least three months behind with their mortgages - valued at a €8.6bn.
Joan Burton, Minister for Social Protection and former Finance Spokeswoman for the Labour Party, warned the debt of ordinary households was now the biggest issue.
"We need to sort out a refinanced arrangement with our partners in the EU and IMF and basically give Ireland a fresh start," she said.
"That's the mandate we got in the election and that's the mandate we propose to fulfil.
"We have a lot of positives in the Irish economy at the minute but there is that cloud on the horizon."
The International Monetary Fund and the European Union stepped in with loans worth €67.5bn last November. The State also took €18bn from the National Pension Reserve fund. About €10bn of the total bailout was destined for the banks.
About €46bn of State funds has been earmarked over the last two-and-a-half years to recapitalise reckless lenders.
The Central Bank is supplying loans worth about €70bn on an ongoing basis and the European Central Bank is supplying about €80bn to Irish banks.
When the Central Bank details the latest, and hopefully the final, debt bill and it is combined with sums already guaranteed or owed, Irish banking debt will be somewhere in the region of one-and-a-half times the total value of the Irish economy.
Permanent TSB, as part of IL&P - which was de-listed from the London and Dublin stock exchanges this morning after a sudden share price collapse - it is expected to fail the stress tests by €2bn.
A Government cash injection would see it effectively nationalised and the board forced into selling its lucrative pensions division Irish Life.
Elsewhere, Bank of Ireland has already been paid €3.5bn and there have been reports it wants to raise finance through the markets rather than State investment.
AIB is effectively in State control after €7.2bn of Irish Exchequer funds and has been told it needs at least another €4.6bn.
The EBS, which has been for sale for months, was dramatically taken off the market on the eve of the stress test report.
Finance Minister Michael Noonan ordered the move, angering prospective buyers in the Cardinal Capital investment group, after State agency the National Treasury Management Agency claimed the consortium's bid was not sufficiently commercially attractive.
The other high-profile parts of the domestic banking sector, aggressive lenders Anglo Irish Bank and Irish Nationwide are being wound up by the State.
