Current BoI share price of 60 cents would be the same as €20 for the old shares?

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onekeano

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I was talking to a friend the other day about Bank of Ireland shares and I was surprised when he explained to me that if the shares hit 60 cent that would be the equivilant of their "full price" ie. the price they traded at before the crash (this is might have been around €17-19?).
This is due to the dilution of shares as more and more were issued during the crash.

It got me thinking about some PTSB shares that my kids received and have been sitting in a filing cabinet. I'm wondering what the value (if any) of the old PTSB shares are relative to pre crash?

Any advice would be much appreciated,

Roy
 
A very interesting question. Here are my calculations for Bank of Ireland where I reckon that at a price of 60 cents, they will still be down 80%. But I am very open to having my figures reviewed and corrected.

In 2010, they had a rights issue of 2 for 5 at 55 cents.

If you bought at the height: 5 shares @ €20 = €100
Add 2 shares at €0.55 = €1
Investment 7 shares at a cost of €101

In 2011, they issued 18 for 5 at 10 cents.

So for your 7 shares, you got 25 shares for €2.50

Cost of holding

5 shares @ €20 = €100
Add 2 shares at €0.55 = €1
25 shares @10cents = €2.50
Total cost of 32 shares: €103

Price required to recover investment: €3.20 ( 32 x €3.2 = €103)

If they rise to 60cents: 32 shares @ 60 cents = €18 - so still an 80% loss.
 
It's very easy to value your ptsb shares.

Multiply them by the share price.

I assume that your kids did not subscribe for the rights? If they didn't, then they have been diluted to a virtually worthless state.

AIB is a very odd case. The current market capitalisation is €87 billion. (521 billion shares at 17 cents) We are not allowed to speculate about share prices on askboutmoney, but suffice it to say that I would not be recommending to anyone to stuff their boots with shares at this price, in a company which has just reported €1.5 billion of losses and has shareholders' equity of €11 billion. Of course, I may be wrong...

By comparison, Bank of Ireland which lost "only" €500m in 2013 and has shareholders' equity of €8 billion has a market capitalisation of €10 billion.

It's possible, that someone who subscribed in full for the hugely diluted AIB rights might be back in the black, at these prices.
 
I have tried to find out how the AIB rights issue worked, but I can't get hard information.

They seem to have issued 500 billion shares at €0.01 per share to raise €5 billion in 2011.

Whether the existing shareholders were entitled to buy shares at this price or not, I can't figure out. But in any event, they did not buy the shares as the state ended up owning 99.8% of AIB.

So the existing shareholders were more or less diluted out of existence.

Brendan
 
The continued listing of AIB is a joke with their existing capital structure.

We should sell AIB and write €87 billion off our National Debt! I am surprised certain academics haven't written articles suggesting this route!
 
Brendan Burgess said:
I have tried to find out how the AIB rights issue worked, but I can't get hard information.

They seem to have issued 500 billion shares at €0.01 per share to raise €5 billion in 2011.

Whether the existing shareholders were entitled to buy shares at this price or not, I can't figure out. But in any event, they did not buy the shares as the state ended up owning 99.8% of AIB.

So the existing shareholders were more or less diluted out of existence.

Brendan
Click to expand...

The State investment was not open to existing shareholders of AIB and effectively, these existing shareholdings were heavily diluted as you said. I'd imagine some sort of low-cost exit will ultimately be offered to the holders of these shares when the State gets new private ownership (as well as a 100-for-1 type share consolidation).
 
Sunny said:
The continued listing of AIB is a joke with their existing capital structure.

We should sell AIB and write €87 billion off our National Debt! I am surprised certain academics haven't written articles suggesting this route!
Click to expand...

Not sure if this is sarcasm but obviously the State wouldn't get near €87 billion for its half a trillion AIB shares... even at the best of times AIB never made a valuation above €30 billion.
 
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