Irish banking shares in complete meltdown

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Disclosure: I have shares in Bank of Ireland and am indirectly invested in the other banks.

Does anyone know if there is after hours trading on Irish banking shares. If so where could one view the after hours price. I know on you can get the after hours valuation on any of the US tech stcoks. I don't see anything similar on the ISEQ homepage.

Thanks.
 
Disclosure: I have no shares in any bank or financial institution (apart from a membership account in Irish Nationwide).

Anyone with a pension fund in Ireland almost certainly has an indirect equity stake in Irish banks and other financial institutions.

I may be imagining it, but I've always detected a bit of Paddy bashing among the UK media when it comes to the Irish market. "If the UK is in trouble, Ireland must be worse".

Fundamental book value of the banks doesn't seem to matter at the moment, it's all about perception. Most banks need cheap liquidity to function. If people believe a bank is insolvent then that bank is vulnerable to a forced merger or takeover to improve the perception and provide liquidity. Shareholders may not be rewarded fairly in such a takeover.
 
Brendan said:
Going back to Irish Life and Permanent , the market capitalisation of the company is actually 50% of the embedded value. The embedded value is the cash in the banks + the discounted profits on policies already issued.


Brendan
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I would assume that the same applies to the other banks and they all have a large embedded value. The Financial Regulator has already stated that he is happy with the banks and that they have the funds to cover all possible outcomes.

I suggest that the Government issues a statement tomorrow morning, before the market opens, stating that they will buy any shares that are offered for sale at a lower price than the price at close of business today. This will give them time to decide what to do and will also stop the panic selling that is going on. In the worst situation they will lose some money but if what Brendan says is true, they will end up buying shares at below their true value.

Given the massive fall in the DOW, after the close of business here, I would expect an even bigger bloodbath on the ISE tomorrow. This fall is going to be bad for confidence in the country and for the pensions that we all have in one way or another. It couls also mean that some of the banks have to br nationalised.

At least this way we can buy some time until it becomes clear what is our best course of action.


Murt
 
The embedded value of a life insurance company is a technical concept. It's not like the book value of a bank which is subject to a lot more estimates and provisions.

If you are trying to value Anglo for example, you have to second guess the direction of the property market and whether their customers will be able to repay their loans.

Brendan
 
I think its very important not to lose touch of why the Irish banks are being hammered so much. Its not because they are unprofitable. Its because they cannot fund themselves.... they cannot get access to money. Also the big hedge fund players have the Irish banks by the throat and are short both the ISEQ and the basket of financials. With the fall of nearly 50% in Anglo today unless the govt do something overnight Anglo will trade below 1 tomorrow and could easily go to the wall. This is unfortunate but can the govt step in and pick and choose which bank to support as its only time before the rest of the banks face the same dillema.

Disclosure: I have no shares in Irish banks.
 
I tend to agree with Mugsgame and don't think it is worthwhile assessing a banks worth based on p/e ratios or net asset values in the current environment.

A bank can become insolvent despite its current profitability because of an unwillingness of other banks to lend it money. If it is suspected that an Irish bank will suffer significant bad debts in the future then other banks will charge it high interest rates and / or withdraw finance entirely. The high finance costs that result from unfavourable sentiment will quickly give rise to unprofitable lending which may result in insolvency.

I don't believe share price movements directly affects a banks ability to survive, however, it does affect sentiment and unfavourable sentiment adversely affects a banks ability to finance its balance sheet at interest rates that allow it to make profits.

I don't have holdings in any Irish banks.
 
Irish bank share prices bear no relationship to fundamentals.
I would think now would be a very good time to do a benjamin graham like analysis of irish bank shares. Any value investor boffins out there?

Disclosure
I have no direct holdings in Irish bank shares.
 
markowitzman said:
Irish bank share prices bear no relationship to fundamentals.
I would think now would be a very good time to do a benjamin graham like analysis of irish bank shares. Any value investor boffins out there?

Disclosure
I have no direct holdings in Irish bank shares.
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I think it is pointless to try to value Irish bank shares using 'fundamentals' given that it is unfavourable sentiment that is causing the liquidity crisis and the banking failures. I don't think sentiment / excessive risk-taking can be easily factored into such a value based approach yet these are the matters that are fundamental to any buy or sell decision.
 
Murt10 said:
I suggest that the Government issues a statement tomorrow morning, before the market opens, stating that they will buy any shares that are offered for sale at a lower price than the price at close of business today. This will give them time to decide what to do and will also stop the panic selling that is going on. In the worst situation they will lose some money but if what Brendan says is true, they will end up buying shares at below their true value.

Given the massive fall in the DOW, after the close of business here, I would expect an even bigger bloodbath on the ISE tomorrow. This fall is going to be bad for confidence in the country and for the pensions that we all have in one way or another. It couls also mean that some of the banks have to br nationalised.




Murt
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Just wondering why its ok to effectively bail out the banks and not property developers. I like many others am likely to lose my job soon if theres no upturn in the property markey.

I have no shares in any banks
 
i have no shares with nobody not even irish banks.

I am however seriously comtemplating getting some Irish Bank shares now.
Am I crazy or does anybody think along these lines....I have just received my davy telephone share dealing account application in the post...this takes three days or so to set up...which is a long time....thoughts anybody?
 
beekeeper said:
With the fall of nearly 50% in Anglo today unless the govt do something overnight Anglo will trade below 1 tomorrow and could easily go to the wall. This is unfortunate but can the govt step in and pick and choose which bank to support as its only time before the rest of the banks face the same dillema.
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Very astute foresight there Beekeeper.

Disclosure: shares in AIB
 
flusteredma said:
i have no shares with nobody not even irish banks.

I am however seriously comtemplating getting some Irish Bank shares now.
Am I crazy or does anybody think along these lines....I have just received my davy telephone share dealing account application in the post...this takes three days or so to set up...which is a long time....thoughts anybody?
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I have shares in BoI (and exposure to all the rest thorugh my pension fund)

to answer your question: yes, you are crazy!

Don't go near this market until things stabilise, you would be better off going down to your local casino as things currently stand. Nobody, repeat nobody, knows where we are going next - this is completely uncharted territory. Any technical or fundamental analysis would tell you that most banks are screaming 'buys' at present but this market is now being driven by fear - and banks around the world are being driven out of business because of it (Bear, HBOS, Wachovia,B&B,Northern Rock, Fortis, Hypo - these names mean anythign to you?). Stay on the sidelines, there will be plenty of buying opportunity when\if things settle down.
 
Brendan said:
Discussing share valuation is a very sensitive issue. Could people please disclose upfront in any post whether or not they own shares in banks. Any posts which don't have such a comment will be deleted.
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The poster disclosure is good idea,
and maybe this would over complicate things,
but wouldnt it be helpful and interesting to know if posters had any
other vested interests in the banks,

eg I work of bank X, or my husband does, my dad is a regional manager at
bank Y, I have a fund with bank B

in examples above these people would probably own shares anyway in bank, and have an even more emotional view of whats happening than
"standard" investors

I know people that do work for a bank, and also have bought LOADS
of shares (most through employee share option schemes) in the bank
they work for!

I always advised against this - doubling your bets on the one company.
(company goes down -> lose job and investment)

I can say although its obviously very depressing, most of them have
buried their heads in the sand and are hoping things will be OK....

JR.

Disclosure: I have no professional association with banks, and own BOI shares directly! :(
 
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