Investors watch as AIB struggles to retain place on Eurostoxx 50

Ireland's largest bank is in danger of losing investors, and consequently value, if it falls out of the Eurostoxx 50 at the end of this week.

AIB has lost almost €4 billion in market value since the middle of February when it hit a peak of nearly €21 billion and as a result may be shunted out of the Eurostoxx 50 on Friday when the index undergoes its annual review. As a member of the index, AIB shares are automatically included in a large number of global investment portfolios.

Eamonn Hughes, a banking analyst at Goodbody, said that while the possibility that AIB will remain in the index has improved, at the close of business last Friday it would still have been excluded.

Irish banking stocks have been particularly badly hit in the recent market turmoil as concerns about the property sector in the US have filtered through to the Republic.

AIB is the only Irish bank, and in fact the only Irish company, to currently be included in the Eurostoxx 50, an index that is made up of the euro zone's largest companies. Mr Hughes said it was difficult to say how much of AIB's trading is a result of its inclusion in the index.

As of the close of trade last Friday, AIB had a market value of €17 billion. In a note to investors released yesterday, Mr Hughes said that AIB needs a relative market cap increase of €681 million (a gain of 3.8 per cent) to rise above Endesa, the 50th member of the index on Friday evening.

He said, however, that it will be a close call, with several other stocks only needing to fall slightly in value to make way for AIB, something that is very possible given the recent volatility in global markets.

Shares in AIB yesterday slipped half a per cent, to close at €19.38 in a generally positive market.