Bank of Ireland Shares fell below € 1

Bank of Ireland's share price is back above € 1 this afternoon, regaining some value after losing more than 15% this morning.
It was the first time ever in the 225 year-long history of the bank that its shares fell below € 1.

The bank's shares were the subject of a significant sell-off after it had announced it was suspending paying dividends in a results announcement last week.

Back in February 2007 Bank of Ireland was valued at more than € 18 billion and its shares were trading at well above € 18 a share. Today the bank's value is barely € 1 billion.

In recent times the bank has seen a collapse in confidence, aggravated by acute concern over its exposure to property lending here.

After the announcement of a 32% drop in profits in the six months to the end of September and the suspension of dividend payments last week, its share price began to drift lower to finish last week at € 1.08.

This morning that suspension of dividends has seen the sell-off gain momentum, with the share price falling to 99 Cents, then to 97 and 93 Cents, and eventually reaching the bottom at 90 Cents per share, before regaining 15 Cents to stand at € 1.05 this afternoon.

Investment funds, which hold the shares long-term to earn income from dividends, have had no option but to sell. But they are selling into a market with no appetite for Irish banks, and where 'short selling', which encourages investors to buy shares at low prices, is the subject of a ban from the Financial Regulator.

Analysts think that some people and institutions with plenty of cash - especially from the Middle East and Asia - might be picking up some of the Bank of Ireland shares at these bargain prices, hoping to make major gains when the banking crisis will be over in some years' time.

As a result of the great drop in value, Bank of Ireland was taken out of two of the Dow Jones index lists today.

For Ireland as a country and the Bank of Ireland as one of our main financial institutions today's development is a further sign of how far things have gone and how low confidence in Irish banks - and in particular in Bank of Ireland - is now. And given the bank's unwillingness to put all its cards on the table and declare its complete situation, there is no silver lining on the horizon for Bank of Ireland.

Brian Goggin (right), Bank of Ireland's group chief executive since 2004, must be living on an entirely different planet than the rest of us.
In a statement issued on Friday he declared that his bank was "strong, sound and successful" and did not see the need to raise additional capital at the moment. Nevertheless Goggin was more than happy to sign up to the Irish government's - which means the taxpayers' - guarantee scheme. The sooner he is replaced by a more capable man, the better.

It is more than time for the government to intervene, and it would also help if the bank's remaining share holders would show some more responsibility. How a man, whose business has dropped in value from € 18 billion to € 1 billion in 18 months' time can say he is "strong and successful" is beyond me. Perhaps he should see a psychiatrist, as there must be something wrong with his mind.

Irish banks have been run by a bunch of reckless dreamers and fantasists for years, and that is one main reason for the current problem. Only radical change from the top down can bring sense and normality back into our financial institutions.

The Emerald Islander