BANKING STOCKS SET TO SEE MORE VOLATILITY - Shares in AIB fell below €1 yesterday following remarks at the weekend by Central Bank Governor Patrick Honohan that the state could take a larger stake in Irish banks. Although they managed to recover in late afternoon trade, shares in AIB and Bank of Ireland both dropped by 11% at one stage yesterday. That was a seven month low of 95 cent for AIB.
Oliver Gilvarry, of Dolmen Stockbrokers, says that the Irish financial stocks are likely to see continued volatility as loans move into NAMA in January and as talks of majority state ownership continue. He says an investigation into the banking sector would be a good idea, and would give a good impression to international investors. But he says the banking system needs to be stabilised first. The investigation could then find out what went wrong and corrective action could then be taken so that the current situation could never happen again.
The analyst also says that private investors' interest in parts of the Irish banking system seems to be recovering with Harris Associates building back up its stake in Bank of Ireland to 6% in recent weeks.
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MORNING BRIEFS - There was an 11% rise in the number of companies investing in Ireland for the first time year, despite the economic downturn. According to IDA Ireland, despite a 30% global decline in foreign direct investment this year, Ireland outperformed in attracting companies, with the level of foreign direct investment falling by just 4% compared to the previous year. This year there have been 125 new investments by multinationals, creating 4,500 jobs. But net employment within IDA-supported companies fell by 10%, or 13,400, during the year.
*** The new chief executive at Aer Lingus, Christoph Mueller, has warned Transport Minister Noel Dempsey that the planned rise in passenger charges at Dublin airport would increase its costs by €25m a year, possibly forcing the airline to seek greater savings from staff in its restructuring plan. He said it would not be possible to pass the cost on to the consumer in the current trading environment. The Minister has also heard from a lobby group representing major airlines at Dublin airport. They complain that they have been repeatedly refused meetings with the Dublin Airport Authority over plans to discuss the planned 41% increase in passenger charges. The Dublin Airport Consultation Committee is made up of Aer Lingus, City Jet and Ryanair and other airlines.
*** Aer Lingus yesterday appointed the former Rentokil finance director Andrew Macfarlane as its interim chief financial officer.
*** On the currency markets, the euro is trading at $1.4290 and 88.96 pence sterling.
