Banks slip on recapitalisation concerns

The Irish index of shares slipped more than 1.2 per cent this morning as bank stocks tumbled on concerns that the institutions would have to raise more capital than previously anticipated.

By 11.57am, the Iseq was down 42.05 points to 3,081.44.

Shares in Bank of Ireland slipped 5.9 per cent to €1.21, while AIB was down 6.9 per cent to €1.46.

The Government is expected to present bank recapitalisation plans on March 30th, as reported in The Irish Times today. Minister for Finance Brian Lenihan is also expected to give an update on the loan discounts and how much extra capital the banks will need as a result.

Weekend reports in the Sunday Business Post said the valuation of the first tranche of loans to be transferred by next week would cause a negative surprise. That in turn would require the banks to raise more capital than earlier expected.

"It will be negative for the banks," one Dublin-based trader said.

The European banking sector, meanwhile, was 1.7 percent weaker.

Elsewhere on the Irish market, construction stocks were also fown, with CRH losing 1.7 per cent to €18.54 shortly before noon.

Earlier today, Wolseley reported half year results to the end of January that were slightly ahead of estimates. The company said the current economic environment provides "limited visibility while demand remains inconsistent across business units". It said residential and RMI markets have broadly stabilised but the group remains cautious.

Airline Ryanair was down 1.4 per cent to €3.45, while rival Aer Lingus was in positive territory, adding 0.8 per cent 59 cent. Unions at Aer Lingus are expected to announce today they will  re-ballot workers on cost cutting plans that would see the airline shave €97 million. Cabin crew had previously rejected the deal.

Additional reporting - Reuters