Shares in AIB slumped below €1 today following remarks by Central Bank governor Patrick Honohan yesterday that the State could take a larger stake in Irish banks.
Speaking yesterday on RTÉ Radio, Mr Honohan said: “It could be majority Government ownership. I am not committing to that. Some people are very keen on that, I think it is quite possible.” Mr Honohan also called for an inquiry into the Irish banking crisis.
Shares in AIB lost as much as 11.5 per cent during the morning's session, falling to 96 cent a share. However, they rebounded later in the day to close at €1.03, down 5 cents on yesterday.
Bank of Ireland shares were also hit, falling almost 11 per cent throughout the morning. During the afternoon, the shares boucnced back to end today's session up 4 cents at €1.22.
Irish Life and Permanent was not affected as badly, ending the day down 3 cents at €3.04. There was speculation over the weekend that Permanent TSB will raise its mortgage interest rates, after it cut the rate it pays deposit holders.
Despite the weakness in financial shares, the Iseq ended in positive territory, rising 28.59 points to 2,955.78.
Labour leader Eamon Gilmore today called on the Taoiseach to drop his opposition to an inquiry into banking crisis. "There is now widespread public support for the holding of such an inquiry. . . . Twice within the past week the Governor of the Central Bank,
Patrick Honohan, has called for an inquiry," Mr Gilmore said. "It now appears that the only obstacle to the holding of an inquiry is the attitude of Brian Cowen and other senior Fianna Fáil ministers."
"They [taxpayers] are entitled to know who made the key decisions and the circumstances in which they were taken. They are also entitled to know if the regulatory authorities and successive Ministers for Finance and their officials discharged their duties in an appropriate manner," Mr Gilmore said.
Elsewhere on the Iseq, Ryanair rose by more than 3 per cent to €3.39 , while rival Aer Lingus was down 1 per cent at €0.52.
Shares in Independent news and Media closed unchanged at €0.13 following Friday's confirmation that it was engaged in discussions over the future of The Independent and Independent on Sunday.
CRH rose 3.8 per cent to €18.93 as traders took positive indications from speculation that total funding for US highway budgets would increase by 10 per cent next year. CRH's Americas Materials division will account for over 40 per cent of group profit.