AIB likely to lose its place on Eurostoxx 50 index

AIB looks almost certain to lose its place alongside the euro zone's largest companies on the prestigious Dow Jones Eurostoxx 50, just two years after being admitted to the index.

An annual review of the index's components is under way, with the final cut depending on stock prices at the close of business yesterday.

The official selection list will not be published until Monday, but calculations made by Irish stockbrokers yesterday indicate that AIB will lose its place on the index.

AIB is the only Irish company to be included on the Eurostoxx 50, but recent turmoil in financial markets has seen billions wiped off its market value and it has slipped to the bottom of the index rankings.

To retain its membership of the Eurostoxx 50, AIB had to overtake Alcatel-Lucent, which was one place ahead on Thursday evening at number 50, while also fending off competition from potential new entrants Schneider Electric and Vinci.

Although AIB rose 10 cent yesterday to end at €18.74, it is very unlikely that this increase will be sufficient to secure its position on the index for another year.

As a member of the Eurostoxx 50, AIB shares have been automatically included in a large number of global investment portfolios that track the index.

The index will be rebalanced on September 21st and, if AIB loses its place on the Eurostoxx 50, it is likely that index-tracking funds will sell off their holdings in the stock.

The impact of this is difficult to predict, as the level of funds that track the Eurostoxx 50 is not known.

However, market rumours suggest that it will be equivalent to at least 10 days of trading volume.

"There will . . . be natural sellers of the stock," one banking analyst said yesterday.

"The question is whether there's an appetite out there to pick up the stock at current levels or lower levels."