Funds reveal short bets on Irish banks

SEVEN INTERNATIONAL hedge funds that have bet hundreds of millions of euro on a fall in the share price of Irish bank stocks have revealed their positions.

Although it is normal stock market practice, since last Friday short-selling of the four Irish publicly quoted banks has been banned by the Financial Regulator.

As part of the ban, the regulator instructed any person with an "economic interest involving 0.25 per cent or more" of an Irish bank's share capital to reveal it by September 23rd.

Five US and two London-based funds have disclosed their short positions. Cumulatively they have short-sold 4.56 per cent of Anglo Irish Bank stock, 2.25 per cent of Bank of Ireland, 0.88 per cent of Allied Irish Bank and 0.88 per cent in Irish Life & Permanent.

As it is not clear when the share trades took place, brokers said the actual monetary value of the bets is unclear.

Using yesterday's closing prices, the figures would suggest the hedge funds hold a position worth approximately €128 million in Anglo, €89 million in Bank of Ireland, €49 million in AIB and €13 million in Irish Life & Permanent.

US-based hedge fund Tiger Global Management holds the largest overall position. It has disclosed a 1.31 per cent short on Irish Life & Permanent, a 0.88 per cent short on Bank of Ireland and a 0.78 per cent position on Anglo Irish Bank.

UK-based Lansdowne Partners holds the largest single short position of 1.63 per cent of Anglo Irish Bank shares. A spokesman for Lansdowne declined to comment last night on why it had adopted a short-selling stance on Anglo Irish Bank.

Blue Ridge Capital Holdings, a privately-owned hedge fund based in New York, holds the third-largest disclosed short position of 1.32 per cent, or 10,045,000 shares, in Anglo Irish.

Dublin analysts said because the disclosure level was set at 0.25 per cent, the full extent of short-selling in the Irish market remains unclear.

The introduction of the short-selling ban last Friday saw the Dublin market gain over 10 per cent, with banking stocks enjoying record gains as hedge funds looked to cover their short positions. While the regulator banned investors from taking new short positions, existing positions can be maintained, reduced or closed.

By maintaining their positions the seven international funds are betting Irish banking stocks will fall lower than their current levels.