Nama worries put increased pressure on bank stocks

DUBLIN REPORT: Iseq:3,176.00 (+32.28) Settlement date:September 14th

SUSTAINED PRESSURE on the banks was the main feature of the Iseq index yesterday, as pre-Nama investor speculation continued to weigh on the share price of Bank of Ireland and AIB.

Some 5.1 million shares in Bank of Irelandchanged hands, dragging the stock down 2.7 per cent to €2.22, while AIBfell 4.6 per cent to €2.31 on volume of 2.6 million.

Both banks also saw their junior subordinated debt downgraded yesterday by Moody’s. Further clarity on the workings of the Nama is expected today with the legislation due to be published one week ahead of the Dáil debate.

Although the two banks dragged down the overall Iseq, their small weighting relative to their peak meant the market was still able to finish in positive territory, thanks to gains in building materials group CRH and Ryanair, the two largest stocks on the index.

CRHfinished up 2.4 per cent at €18.75, with its fortunes mirroring those of the rest of the market, which enjoyed improving sentiment in the afternoon.

The two big climbers were paper and packaging group Smurfit Kappa, which bounced 7 per cent to €5.78, and industrial holdings group DCC, which rose 4.8 per cent to €17.45. The former enjoyed decent trading volumes of 1.6 million. There was buyer interest in Irish Life & Permanent,which rose 3.4 per cent to €5.15, while drinks group C&Ccontinued its busy run, although it slipped back 1 per cent yesterday to close at €2.76.

Aer Lingus, which confirmed on Tuesday that 63 cabin crew on fixed-term contracts were to lose their jobs, added one cent to close at 59 cent, while Ryanairfinished up 2.7 per cent at €3.38.

The gains for the two stocks echoed a pattern of more benign sentiment toward the airline sector, with British Airways the big winner on the FTSE yesterday.