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Allied Irish eyes nearly US$2b more
By Shawn Pogatchnik |
April 21, 2009, Tuesday
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Print Edition
Print Edition
IRELAND'S largest financial institution, Allied Irish Banks PLC, announced yesterday it wants to raise an extra 1.5 billion euros (US$1.95 billion) this year to regain the confidence of global creditors.
Investors welcomed the news. Allied Irish shares led the Irish Stock Exchange higher, soaring 16 percent to 1 euro in early trade.
But analysts cautioned that Allied Irish's renewed need for cash reflected deepening international concern over the ability of Ireland's banks - and its government - to shore up their debt-saddled books. They said the move raised doubts over whether the government's bank bailout efforts to date are enough.
In January, the government nationalized specialist lender Anglo Irish Bank to prevent its collapse amid a loan-hiding scandal, and in February announced plans to buy 3.5 billion euros of stakes in both Allied Irish and the nation's second-largest lender, Bank of Ireland, which both face billions in potential losses from property loans gone bad. At the time, Allied Irish insisted it didn't see the need for state aid.
"Since then, market and public uncertainty about our capital adequacy has persisted," the Dublin-based bank said in its statement to the exchange.
Allied Irish said its internal risk analysts have been exploring worst-case scenarios with Finance Minister Brian Lenihan and have concluded that the bank needs to raise its cash reserves by 5 billion euros this year. That figure includes the government transfusion, which still faces shareholder approval on May 13, and an extra 1.5 billion euros to be generated potentially by a share flotation and asset sales.
"Potential sources of this capital include the disposal of assets, and marketable assets will be considered as part of this process. This commitment represents a reappraisal of our previous view in relation to asset disposal," Allied Irish said.
The bank didn't specify any assets it might put on the block.
Allied Irish has the biggest branch network in Ireland. The bank also has a 24.2-percent stake in M&T Bank Corp of New York and owns a 70.5-percent holding in Poland's second-largest bank, Bank Zachodni WBK.
Investors welcomed the news. Allied Irish shares led the Irish Stock Exchange higher, soaring 16 percent to 1 euro in early trade.
But analysts cautioned that Allied Irish's renewed need for cash reflected deepening international concern over the ability of Ireland's banks - and its government - to shore up their debt-saddled books. They said the move raised doubts over whether the government's bank bailout efforts to date are enough.
In January, the government nationalized specialist lender Anglo Irish Bank to prevent its collapse amid a loan-hiding scandal, and in February announced plans to buy 3.5 billion euros of stakes in both Allied Irish and the nation's second-largest lender, Bank of Ireland, which both face billions in potential losses from property loans gone bad. At the time, Allied Irish insisted it didn't see the need for state aid.
"Since then, market and public uncertainty about our capital adequacy has persisted," the Dublin-based bank said in its statement to the exchange.
Allied Irish said its internal risk analysts have been exploring worst-case scenarios with Finance Minister Brian Lenihan and have concluded that the bank needs to raise its cash reserves by 5 billion euros this year. That figure includes the government transfusion, which still faces shareholder approval on May 13, and an extra 1.5 billion euros to be generated potentially by a share flotation and asset sales.
"Potential sources of this capital include the disposal of assets, and marketable assets will be considered as part of this process. This commitment represents a reappraisal of our previous view in relation to asset disposal," Allied Irish said.
The bank didn't specify any assets it might put on the block.
Allied Irish has the biggest branch network in Ireland. The bank also has a 24.2-percent stake in M&T Bank Corp of New York and owns a 70.5-percent holding in Poland's second-largest bank, Bank Zachodni WBK.
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