AIB shares rise on capital deal

The Irish index of shares rose almost 1.3 per cent today as renewed strength in banking stocks pushed the Iseq higher.

Shares in AIB rose as much as 6.5 per cent this morning before slipping back to €1.57, a 5.3 per cent rise. The lender yesterday said it generated about €445 million of new capital from restructuring its debt.

The bank paid investors in six lower tier two bonds between 74 per cent and 91 per cent of their face value to swap to longer-dated bonds that paid a higher coupon.

The six subordinated bonds had a face value of €2.21 billion; investors swapped them for about €1.76 billion of new, higher-yielding debt. The bank will issue the new debt to investors on Monday.

NCB Stockbrokers said the result was at the higher end of estimates.

AIB is set to transfer some €23 billion in loans to the National Asset Management Agency (Nama), with the first transfer expected to take place within days.

Bank of Ireland, meanwhile, was up 3.3 per cent to €1.29, while Irish Life and Permanent, which is not participating in Nama, was up 4 per cent to €3.12.

Minister for Finance Brian Lenihan said yesterday he would publish legislation this week to reform the Central Bank and the Financial Services Authority of Ireland (FSAI). Mr Lenihan made the statement following yesterday's publication of a report by Comptroller & Auditor General (CAG) John Buckley which outlined the inadequacy of the Financial Regulator’s response to the financial market crisis, and made a number of recommendations to address some issues highlighted by the crisis.

Elsewhere on the market, Irish Continental Group added 2.9 per cent, or 45 cent, to its share price after it announced that it had noted a slowdown in the decline of passengers and freight in the second half of last year. The shares were trading at €15.90 shortly before 11.20am.

Aer Lingus built on yesterday's gains to add 2.1 per cent to its stock, trading at 61 cent. The airline was boosted yesterday by analysts' comments that a potential reballot of cabin crew would be positive for shareholders in the stock.

CRH, meanwhile, clawed back yesterday's losses to trade at €18.92, a 1.6 rise on yesterday's closing price.

The Iseq was up 41.06 points to 3,138.92 by 11.22am.

Additional reporting - Bloomberg