Follow Us on Facebook Follow Us on Twitter Follow Us on Google+ Follow Us on Pinterest Follow Us on Tumblr Visit our YouTube Channel Subscribe to our Feed Subscribe via FriendFeed

Connect With Us

Trade Suspended In Two Irish Banks Prior To Stress Tests

by Jim ONeil on April 2, 2011

in uk banks

Trading in shares of Allied Irish Banks and the Bank of Ireland was suspended prior to the publication of stress tests on Thursday. This information is expected to reveal that these banks require billions of dollars in aid. The 24-hour suspension of trading was handed down by the Central Bank of Ireland and the Irish Stock Exchange.

This move was a proactive attempt to prevent possibly inaccurate rumors from creating a “disorderly market,” according to a joint statement from the Stock Exchange and Central Bank. On Wednesday, trade in Irish Life & Permanent, the other publicly traded bank in Ireland, was suspended.

Trade in all three banks should resume on British and Irish exchanges on Friday.

Analysts anticipate that the stress test results on Ireland’s four remaining banks will force all institutions to come under majority state control. Data revealed by the tests could even push Ireland into default. The Educational Building Society and Allied Irish Banks are already majority state-owned.

They may soon have company in the form of Irish Life & Permanent and the Bank of Ireland.

Industry experts previously predicted that potential Irish bank losses would be euro54 billion in 2010. Economists are now saying that euro80 billion is a more accurate figure. This is about one-half of the entire economy of Ireland. The excess funding of real estate loans by six Irish banks resulted in a financial crisis that began in 2008.

A blanket guarantee from the Irish government, intended to prevent investors from fleeing, left taxpayers accountable for all losses.

Ireland has already received a euro67.5 billion line of credit for deficit funding from the International Monetary Fund and European Union. This was intended to meet the cash requirements of the country through 2014. If the cost to rescue the banks reaches the anticipated level, additional funding will be required to prevent default.

Comments on this entry are closed.

Previous post:

Next post: