Irish Banks Continue Riding the Roller Coaster

By Dr. Declan Fallon

Irish Banks continue to enjoy/suffer a roller coaster ride and the news hitting the tape this morning is hardly the Alka Seltzer the market was looking for.

click to enlarge

Back in early December 2008 I had suggested a potential opportunity for Allied Irish Banks (AIB) at support; although Anglo Irish (AGIBY.PK) had already nixed its own attempt to hold similar support in November. In the end, negative sentiment won out and the AIB opportunity turned into a bust by December 18th when it breached €1.91 support.

The Irish banking sector faces new challenges with the collapse of Anglo Irish Banks, combined with the troubles in Barclays (BCS), Bank of America (BAC) and Citigroup (C), have all helped push the banking sector to new lows. The latest UK bank bailout plan has seen a mixed response from traders.

There was very little joy for AIB shareholders from mid-December.

And the brief "Santa rally" utterly collapsed over the past couple of days:

It looks like traders are pricing a new name to AIB, that of Anglo Irish Banks.

Comments

[mr_man]

Or when Bank Of Ireland is added to the mix 'Amalgamated Irish Banks'

2009 Jan 19 10:21 AM

[Chris B]

If I was going to speculate on high-risk European banks, I'd probably buy National Bank of Greece (NBG) before AIB. The risk of government default is similar, but NBG has actual earnings at a single-digit PE, was not involved in a California-scale housing bubble as the Irish banks were, and has a better balance sheet. Future Irish writedowns are both unpredictable and inevitable and nationalization looms as an equity-destroying possibility.

2009 Jan 20 09:57 AM