PRODUCT PROFILE

Latest Dublin Prices

ISEQ rises as NAMA becomes law

Monday, November 23 12:21:02

Bank shares rose this morning as the President signed off on the NAMA bad bank and the efforts to consolidate the sector intensified.

By 12:00, the ISEQ was up 32.36 points to 2,908.28.

President Mary McAleese has signed the legislation establishing the National Asset Management Agency (NAMA), a "bad bank", allowing the government to start cleaning up banks' balance sheets. The government, which has already been recruiting staff for NAMA, can now formally launch the agency that will pay E54 billion to cleanse banks of risky commercial property loans. The Dail approved the legislation 10 days ago after a protracted debate whose sluggishness contributed to repeated selloffs in the shares of top lenders Allied Irish Banks and Bank of Ireland. Meanwhile, the Government has told EBS and Irish Nationwide Building Society to combine their home loan books in to a single entity within EBS.

Shares in AIB rose by 6c to E1.77, Bank of Ireland gained 1c to E1.71 and Irish Life and Permanent rose by 1c to E3.51.

Following some of the worst flooding on record, and particularly in more rural areas where FBD's market is more concentrated, we thought it worth revisiting the group's reinsurance protection in place for such 'one-off' events. Under the group's reinsurance deal, the absolute downside from claims from a single event in a specific 72-hour period is E5m (15c per share). If this reinsurance is used up, then a new premium will need to be taken out for the remainder of the year, but this is likely to be small given the closeness to year-end. Shares in the insurer fell by 15c to E6.30.

After a solid set of full year 2009 numbers last week, Goodbody are making minimal changes to its United Drug model. "We are forecasting a 1.6pc increase in EPS in 2010 to 23.8c, which remains virtually unchanged from our original forecast going into the FY09 results." Shares in the firm fell 2c to E2.25.

Buoyant commodity prices lifted miners and energy stocks, while improved risk appetite also boosted banks, pushing European shares higher this morning. London's FTSE jumped 93 points (1.8pc) to stand at 5,344 just after 11am, while the Paris CAC was up 65 points (1.7pc) to 3,794 and the Frankfurt DAX gained 91 points (1.6pc) to 5,754.