July 8 (Bloomberg) -- Bank of Ireland Plc, the country's second-biggest bank, fell the most in 19 years after saying a deteriorating Irish economy is ``adversely impacting'' earnings.

The Dublin-based bank fell 12 percent to 4.43 euros at 11:27 a.m., the most since July 1989, cutting its market value to about 4.4 billion euros ($6.9 billion). The shares have lost 56 percent this year.

Bank of Ireland ``acknowledges that the environment has changed considerably since the full-year results in May,'' Scott Rankin, an analyst at Davy, a Dublin-based securities firm, said in a note after speaking to the company. He plans to cut earnings estimates for 2008 and 2009 by ``at least'' 5 percent.

Ireland's economy may enter a recession this year for the first time in more than two decades, as construction shrinks and house prices decline, the Economic and Social Research Institute said last month. Bank of Ireland said today a ``slippage'' in credit quality over the past quarter has been in line with its expectations.

The economic slowdown is ``most pronounced in our retail businesses in Ireland,'' the Dublin-based bank said in a statement today.

The ISEF, an index of Irish financial stocks, fell 12 percent in Dublin. Irish Life & Permanent Plc, Ireland's biggest mortgage lender, fell 19 percent, while Allied Irish Banks Plc, the country's biggest bank, fell 11 percent.

To contact the reporter on this story: Ian Guider in Dublin at iguider@bloomberg.net.

Last Updated: July 8, 2008 06:33 EDT