Bank of Ireland Plc extended declines today as Fitch Ratings said yesterday loan impairments at the biggest Irish lender by assets and rival Allied Irish Banks Plc may rise and the lenders may need more capital.
Bank of Ireland fell as much as 7.6 percent in Dublin trading, following a 5 percent drop yesterday after Goldman Sachs Group Inc. cut its rating on the company’s stock to sell from neutral. It is the biggest two-day fall since May of last year, with the bank helping lead the benchmark ISEQ Index down.
“As Irish banks’ capital ratios continue to be eroded and a return to profitability only appears feasible in the longer term, the banks may need to raise additional capital before they can contemplate a future independent of state support,” Denzil De Bie, a director in Fitch’s Financial Institutions Group said in a statement yesterday. “Impairment charges could increase during 2013 and 2014 as the banks accelerate the resolution of mortgage arrears.”
Goldman Sachs said in a note that Bank of Ireland’s discount compared to European peers had closed this year and was trading at 1 times estimated tangible book value, up from 0.6 times at the start of 2013. About 22.9 million shares traded hands in Dublin, the equivalent of 25 percent of average daily trading volume during the past three months.
Bank of Ireland fell 3.5 percent to 16.5 euro cents as of 9:12 a.m.