Anglo Irish shares fall under €1

For a second day shares in an Irish bank have fallen below the €1 mark on Dublin’s Iseq index of shares. Anglo Irish shares shed 18 per cent of their value, dropping to 91 cent - their lowest level in over a decade.

This follows yesterday's decline in the value of Bank of Ireland shares which hit a 16-year low of 83 cent.

Irish banking stocks are under intense pressure due to investor concerns over whether they have sufficient capital to absorb the projected higher losses on loans.

At lunchtime today, the Iseq index of Irish shares was down 3 per cent at 2,491, a drop of 79 points. Irish Life and Permanent stocks were over 10 per cent lower at €1.40.

AIB shares were also sharply lower, dropping over 7.5 per cent to €2.45, in part due to a fall in the share price of its US subsidiary M&T overnight.

In a note to investors this morning Davy analyst Scott Rankin said this fall would reduce the gain to AIB should it sell the US unit to around €700 million. "This would be a combination of about €1 billion in goodwill and a loss of maybe €350 million," he said.

This compares to a previous management estimate of a €1.2 billion gain should the unit be sold.

Bank of Ireland shares remained weak this morning, falling to 81 cents in early trade before rebounding to 91 cents, a gain of 10 per cent.

At this level the bank is valued at around €900 million following a more than 90 per cent fall in its share price over the last 21 months. The shares peaked at €18.65 in February last year.

Bank of Ireland's shares have been under pressure since it scrapped its dividend last Thursday and reported a 32 per cent drop in underlying pre-tax profits.

Last week Bank of Ireland said it had sufficient capital reserves to absorb projected higher loan losses over the coming years.