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News : International Last Updated: Nov 1, 2011 - 8:59 AM


Markets News: National Irish Bank reports 9-month loss of €600m; MF Global collapse biggest Wall Street bust since Lehman
By Finfacts Team
Nov 1, 2011 - 8:47 AM

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Danske Bank Group today announced its financial results for the nine months to 30th September 2011.  Profit before tax was €482m, down 28% on the first nine months of 2010.

Its Irish unit, National Irish Bank, reported an operating profit before impairment charges of €32m, a decrease of 11% on last year. Income fell 17% to €103m due to reduced customer demand and the impact of impaired loans. Costs fell by 19% to €71m, driven by the bank’s restructuring programme. Bad debt charges of €632m were set aside, leading to a loss before tax of €600m.

National Irish Bank’s total loan book was €9.0bn, down 8% on last year.  Commercial property loans amounted to €3.3bn, with most of the bank’s loan impairment charges in this area. NIB said the quality of the bank’s €3.4bn mortgage book remained satisfactory.


Customer deposits increased by 18% to €5.0bn.


Commenting on the results, Andrew Healy, CEO, National Irish Bank said:“Impairments remain very high mostly due to the continued weakness of the property market in Ireland. This said, they are slightly down on the previous quarter and we hope to see a downward trajectory moving forward. Deposit and cost performance is encouraging, with the benefits of our restructuring programme particularly being seen on the cost line.

National Irish Bank and Danske Bank Group remain strongly committed to Ireland. We believe the changes we have made to our business create a good platform for growth once market conditions improve.”

MF Global Holdings, the US commodities and futures brokerage, that made calamitous bets on Eurozone debt, collapsed into bankruptcy Monday when a potential buyer quit over a discrepancy of hundreds ofms of dollars in the beleaguered securities firm's books, people familiar with the matter said according to The Wall Street Journal.

MF Global run by Jon Corzine, former: New jersey governor, US senator and CEO of Goldman Sachs - - the investment bank, two weeks ago had a market capitalization of $612m but it had plunged to a valuation under $200m - - on losses on risky bets made by Corzine.

The New York Times reports that MF Global began buying the debt of European countries like Italy, Portugal, Spain and Ireland last year, in a bet that the discounted prices of those bonds would soon recover.

The Journal says the firm filed for Chapter 11 bankruptcy protection Monday, the eighth-largest corporate bankruptcy in US history and the biggest failure by a securities firm since Lehman Brothers Holdings filed for Chapter 11 in September 2008.

It's reported that there was a difference of about $900m on what customers had on deposit at the brokerage.

MF Global collapse

:

Trade levels in Irish equities increases by 26.3% in Q3 compared to Q2: The Irish Stock Exchange [ISE] said on Monday that trades were up were up 26.3% with over 684k trades recorded in the third quarter compared to the second quarter of 2011 [542k]. The daily average trade figures on the ISE’s markets were also higher in Q3 with an average of 10,367 trades recorded per day [Q2: 8,882 trades], a rise of 16.7%, with year on year figures showing growth of 11.7%. Turnover rose by 5.5% to €8.8bn [Q2 2011: €8.3bn] with daily
average turnover in equities down slightly to €133m [Q2: €136m] reflecting the higher number of days in Q3 [66 days compared to 61 days in Q2].

Irish companies trading on ISE raise €7.7bn in third quarter: Six companies trading on the Main Securities Market and Enterprise Securities Market raised €7.7bn the third quarter bringing to €10.1bn the amount of money raised by Irish companies in the first nine months of 2011. The key transactions during Q3 were both related to the banking sector. Bank of Ireland raised €2.5bn while the Government invested €5bn in AIB plc through the issuance of new shares.

Market capitalisation of companies included in the ISEQ indices rose by almost €15bn during the quarter to €65.8bn at the end of September 2011, an increase of 29.3%.

Economic View: Draghi gets thrown into the Eurozone cauldron; Dermot O’Leary, chief economist at Goodbody comments  -- "If European leaders had planned to present a united front at tomorrow’s G20 summit in their fight against the sovereign crisis following last week’s crisis summit deal, the markets, after an initial endorsement, have put paid to that. While the major concerns revolve around the lack of specific details, Greece added an extra layer of uncertainty last night by calling for a confidence vote in the Government and for a referendum on Greece’s second aid package.

The confidence vote will take place this Friday, with the referendum likely to take place in either December or, more likely, January. One would have thought that Greek people would be in favour of a 50% write-down on their sovereign debt, but a weekend poll suggests that the majority is against the second package. This news, along with the bankruptcy of MF Global, made yesterday very much a risk-off day for markets: in Europe, German 10-year bund yields fell by 10 basis points, although there was only little movement in Irish yields. 

Italian bond yields rose and thus remain above the important 6% level. New ECB President Draghi will be severely put to the test as he starts his term today. While his predecessor Trichet was loath to intervene aggressively in the market for sovereign bonds, ongoing uncertainty will dictate that the ECB will continue to have a large role to play in how this crisis plays out. Although we don’t expect it, a rate cut at his first policy meeting this Thursday would be a clear statement of intent."

Irish Financials: AIB set to sell US loan book for 15-20% haircut; Eamonn Hughes, head of research at Goodbody, comments  -- "Press reports indicate that AIB is set to sell a $600m pool of US commercial property loans to Blackstone Group and Wells Fargo for a 15-20% haircut.

The disposal represents a further step in the de-leveraging process for the bank and the domestic banking system in general. The haircut is higher than that incurred by BOI last week in its de-leveraging update, but looks to be inside some of the more stressed average haircuts that will have been applied in the PLAR (bank stress tests)exercise."

US Markets

The Dow Jones Industrial Average closed down Monday 276 points or 2.26% to 11,955. The Nasdaq Composite lost 1.93% and the S&P 500 dipped 2.47%.

Asia Markets

The MSCI Asia Pacific Index dropped 1.9% Tuesday.

Japan's Nikkei 225 fell 1.70%; China's Shanghai Composite added 0.07%; Australia's S&P/ASX 200 declined 1.152% and the Bombay Stock Exchange Sensex 30 index in Mumbai dropped 1.39%. South Korea's Kospi dipped 0.04%.

Asia benchmarks

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 fell 2.51% in early trading Tuesday.

The ISEQ has dipped 2.72% in Dublin.

CRH has dipped 4.13%.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3709 and at £0.8580.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Monday this week, the BDI fell 53 points or 2.63% to 1,965.

Crude oil for November 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $91.52 down $1.67 from Monday's close. In London, Brent for November delivery is trading on the International Commodities Exchange at $107.89. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $16.

Gold spot price

The spot price of an oz of gold is trading in New York is at $1,710.70 per oz, down $4.40 from Monday's close in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 6.

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