BILLIONAIRE Dermot Desmond sold a substantial amount of his shares in the country’s two biggest banks, sources revealed last night.
In doing so, he has made millions of euro profit.
But the move is bound to raise questions in the market about the banks’ ability to ride out the current crisis, as debate over the State’s planned “bad bank”, the National Asset Management Agency (NAMA), intensifies.
Mr Desmond’s decision to buy almost 1pc of Bank of Ireland and just under 0.6pc in Allied Irish Banks in January infused confidence in the banks.
But by the same token, his move to sell shares is bound to raise doubts among certain sections of investors. The share selling is understood to have occurred within the past few weeks.
It comes as Finance Minister Brian Lenihan prepares to unveil next month the discounts the banks will have to take on risky property loans bound for NAMA. Mr Lenihan has not ruled out the State taking majority stakes in either bank, if they are left with large holes in their balance sheets as a result of the loan writedowns.
However, the Government hopes that both will be able to source private investment once “toxic” assets have moved into NAMA.
Mr Desmond, estimated to be worth more than €1.5bn, acquired 8.9 million shares in Bank of Ireland through his investment vehicle IIU Nominees in early January, when the shares were trading at 88c a piece, and valuing his holding at €8.72m.
He stood to make a profit of up to €11.8m by selling down his entire stake, based on an average BoI share price of €2.21 over the past three weeks.
IIU also purchased 5.1 million shares in AIB at the start of the year when the stock was changing hands at €1.71 each — pointing to a €8.72m outlay for the position.
With AIB’s shares trading at an average of €2.14 over the past three weeks, Mr Desmond was placed to generate a €2.2m profit if he sold out of the bank. Read full article…
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