Markets slip amid fresh US tariff talk, but AIB bucks the trend
The latest strain came despite a lack of specifics on how or when either sector would be affected.
Lack of any sign of progress on purported talks between the US and China to reopen trade between the world's two biggest economies also weighed on investor mood.
The dollar is carrying the brunt of the impact as investors have reacted to uncertainty by shifting away from US assets, pushing the euro, yen and Swiss franc higher.
On Tuesday, the dollar index, which measures the greenback against a basket of currencies, including the yen and the euro, fell 0.38pc to 99.43.
The euro was up 0.27pc at $1.1346. Against the Japanese yen, the dollar weakened 0.6pc to 142.84.
The Canadian dollar and sterling also strengthened versus the dollar though the Swiss franc weakened.
The latest falls in equities was orderly and not uniform.
In Dublin, the Iseq 20 index of leading shares closed down but AIB ended the session up on Tuesday and above €6 each, edging towards the territory of a putative directed buyback of €1.2bn of State-owned stock. But the shares were unusually volatile – bouncing from a low for the day of €5.87 and a high of €6.155. That repeated a pattern of big intra-day swings seen last week, with similar daily highs and daily lows recorded on Friday and Thursday.
The bank's board will decide by on Thursday whether to go ahead with the buyback at a minimum of €6.26 a share after shareholders overwhelmingly approved the proposal last week despite a yawning gap between the trading price of the stock and the level the deal was struck.
AIB must determine the plan is in the bank's best interests, including pricing, if it is to press ahead with the deal. The closer the stock is to the €6.26 level the more likely the board is to be comfortable with pressing go on the deal.
In London, shares in BP rose after a Bloomberg report on Monday that Shell is working with advisers to evaluate a potential acquisition of its UK rival.
The London Stock Exchange was closed on Monday due to a bank holiday.
The takeover report suggested Shell has discussed the feasibility and merits of a BP takeover with advisers in recent weeks, although it's waiting for further stock and oil price declines before deciding whether to pursue a bid.
A combination of Shell and BP would be one of the oil industry's largest-ever takeovers, bringing together iconic British majors and long time rivals.
BP is vulnerable to a takeover after its shares have lost almost a third of their value in the last 12 months as a turnaround plan has fallen flat with investors and oil prices tumbled.
BP has been battling prolonged underperformance stemming in large part from a net-zero strategy embraced by former CEO Bernard Looney. His successor, Murray Auchincloss, announced a reset in February that included a pivot back to oil, cuts to quarterly share buybacks and promises to sell assets.
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Extra.ie
10 hours ago
- Extra.ie
This is how much Ireland's Euromillions winner will earn in interest alone
The mystery winner of Ireland's largest-ever €250m EuroMillions windfall will earn €5m a year in interest without even spending a cent of their newfound mega-fortune. Financial experts this weekend said even Ireland's notoriously stingy banks would pay 2% interest on the massive winnings. And even if they don't opt to squirrel away their fortune in a high-interest Swiss bank account, the 2% Irish rate would still earn the winner a princely €416,667 every month on €250 million, or €5,000,000 a year. In Co. Cork, Ireland, the winning €250 million EuroMillions ticket was located last week. Pic: Shutterstock At the stroke of a pen – or a computer-generated quick-pick – the newly minted lottery winner has landed almost half of U2 frontman Bono's personal fortune, or a shade less than golf Grand Slam hero Rory McIlroy's reported €280m earnings. It's likely the elated lottery winner will blow at least a portion of their megabucks windfall on a new home, a holiday or a toy. If it's the latter, a Mercedes-Benz S-Class will set them back a mere €242,655. Or if they fancy themselves more of a high-flyer, every billionaire's 'must-have' toy – a Gulfstream jet – would cost around €70m. Mercedes S-Class. Pic: Getty Images However, the winner could probably afford to splash out around €9.5 million for an 11-seater Pilatus PC-24, though it would be more sensible to hire one as needed. Chartering a Pilatus PC-24 from Dublin to the south of France would cost €10,474 – mere pocket change to the winner, whoever they are. As they mull over their life-changing windfall, the rumour mill over the identity of Ireland's biggest-ever lottery winner was in overdrive yesterday. Pilatus PC-24 Pic: NICOLAS MESSYASZ/SIPA/Shutterstock (15365121a) Anyone who walks into the Centra shop on Cork's Shandon Street, where the winning ticket was sold this week, is a likely suspect. 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Pic: Artur Widak/NurPhoto/Shutterstock Mr Champ recalled: 'The National Lottery rang us on Thursday evening. The owner, Ted Clifford, is on holiday, so I then got a phone call. 'It was around six or half six in the evening, and I was in the car on my way home to Fermoy. 'I thought it was a wind-up. I thought it was someone scamming me. But when the person explained who they were, I had to pull in the car for a few minutes.' While the identity of the winner is not yet known, they have been in contact with the National Lottery head office in Dublin. They have 90 days to collect their quarter of a billion fortune – and until they do, the guessing game continues in the close-knit neighbourhood around Shandon Street. Esther Cotter, who works at the Homer pub just a few doors up from Clifford's shop, is a regular lottery player, but insisted she is not the €250m winner. She said: 'We haven't a notion who it is. Everyone is hoping it is someone local. You couldn't keep that quiet here.' Her pal Noelle Nagle agreed, and she's hopeful the windfall will be collected by someone whose life will change for the better. 'We hope that it's someone that needs it. It isn't us,' adding she heard the €250m winning ticket was bought for €7. Local Sinn Féin TD Thomas Gould also said it's only a matter of time before the winner's identity becomes known, if they are local. Mr Gould, whose constituency office is just across the road from Clifford's shop, told 'No one has an idea who it is. Whoever it is, I just wish them all the best. It's an enormous amount of money. 'Clifford's is a real local shop on Shandon Street, and people are delighted we have had such a big win in our local shop. It's something that would be very hard to keep a secret here because everyone knows everyone, and there are great friendships and neighbours here. 'It's probably someone local who has won,' he added. 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Irish Independent
16 hours ago
- Irish Independent
AIB likely to quadruple chief executive Colin Hunt's pay package to €2m after government exit
The sale of the State's final 2.06pc stake has freed the bank from the Government-imposed salary cap on banker pay. It is likely that AIB will look to bump up Hunt's pay – and also add in a equivalent share allowance to at least match that of Bank of Ireland CEO Myles O'Grady. O'Grady is paid a basic rate of €950,000 before his pension or bonus at Bank of Ireland, which divested from State ownership in 2022. That compares to the €500,000 basic wage that his AIB counterpart receives. After pension and bonuses are included, Hunt is currently paid just over €600,000 a year. 'To be fair, a salary of €500,000 for the CEO of the largest bank in Ireland is not competitive. It's well below market rate,' said banking analyst John Cronin of SeaPoint Insights. 'Bank of Ireland pays Myles O'Grady €950k and it pays CFO Mark Spain €600k. So I would say that the CEO and CFO of AIB will go to those levels at least pretty quickly. It's hard for the general public to get their heads around pay packages above €500k "They'll probably keep CEO pay just below €1m. It'd be a surprise if they didn't match Bank of Ireland, and they might go around €25,000 more,' he said. Now that the Government has sold its stake and the salary cap at the bank has been removed, industry sources believe AIB is also likely to add a lucrative fixed share allowance to Hunt's package – effectively matching O'Grady's deal. Bank of Ireland's top executives currently get a fixed share allowance of 50pc of salary, introduced after the State sold its final shares in the bank in 2022. That fixed share allowance is expected to rise to 100pc next year. 'It's hard for the general public to get their heads around pay packages above five hundred grand and why a CEO has to be paid a million,' admitted another industry source, adding that Hunt was seen as unlikely to seek work with banks in London or elsewhere. 'I'd think he would probably attach a huge amount of value to living here, from a family point of view. He's also in the middle of every significant macroeconomic debate in Ireland because of his position – and I wouldn't underestimate the value he attaches to that. 'But if you want to hang on to that management team and keep them together, then you have to compete in the marketplace. And now they have the freedom to compete. "It would be kind of dysfunctional to have a banking market where one big bank can pay double what the other big bank pays, when they're more or less doing the exact same thing,' said the source. Cronin feels the pay cap should never have been introduced. 'I get that it worked politically. But you have to pay people properly to do a job. They could move to another smaller bank and get paid twice the amount and more. The danger is you get runaway cost-inflation across the sector "There is no doubt shareholders saw an ongoing retention risk in relation to the management team and they were not happy about that.' Cronin said bankers are disappointed that Finance Minister Paschal Donohoe did not remove the ban on variable performance-related bonuses above €20,000. 'My own view is that he should, but I can totally understand why he didn't. The danger is you get runaway cost-inflation across the sector. 'But the problem is that it creates cynicism within the sector, where people say that it's OK for the top guys to get paid properly, but not everyone else. And it can drive fixed-pay inflation, which is less ideal from a cost flexibility standpoint.'
The Journal
16 hours ago
- The Journal
Never mind the spin - Ireland isn't close to ‘breakeven' on the €21 billion AIB bailout
Paul O'Donoghue GOOD NEWS – WE'RE up on our big investment! 'What investment?' you cry. Why, the Great Bank Bailout investment, of course! You see, during the week the state sold its final shareholding in AIB. It was once assumed that a lot of the cash poured into the lender was a sunk cost. It turns out, that isn't the case. The government said during the week that, once everything is factored in, AIB will come extremely close to repaying its bailout. Some €20.8 billion was put into the lender during the financial crisis. The government so far has gotten back €19.8 billion. Eventually, the total recovered amount will likely rise to just over €20 billion. Multiple media outlets reported during the week that AIB will end up about '€700 million shy' of repaying the state. Essentially, coming very close to breakeven. This is based on calculations provided by the Department of Finance. The department said when you look at the bailout money collectively put into AIB, Bank of Ireland (BOI) and PTSB, 'the state is €0.6 billion above break-even on its €29.4 billion investment'. All of that sounds great. But it doesn't give the full picture. Here's why. A LUAS tram passes in front of AIB headquarters. Alamy Stock Photo Alamy Stock Photo The debt To cut a long story short – the government's figures don't take debt servicing costs into account. When the Irish state poured €29.4 billion into those AIB/BOI/PTSB during the financial crisis, it borrowed money to do so. This debt costs money to service – quite a bit. Let's start with AIB. As stated, the AIB bailout cost was €20.8 billion. The Comptroller and Auditor General (basically the state spending watchdog) previously estimated that, as of the end of 2021, debt servicing costs on the AIB bailout amounted to €7.1 billion. That amount is on top of the €20.8 billion – so straight away, the actual AIB bailout cost goes to €27.9 billion. And interest is still being paid on that money. In a statement to The Journal , the organisation said the report, published in 2022, 'is the most recent report the C&AG has published on this issue'. But as some interest would still have racked up between 2022 and now, it's likely the final AIB bailout cost, when debt servicing is included, is well above €28 billion. With this in mind, we asked the Department of Finance how taxpayers are €0.6 billion 'up' on the AIB/BOI/PTSB bailouts. A spokesman said: 'The figures are based on a simple cash in, cash out basis. We have never included debt servicing costs over the last 10 years of tracking these figures.' Advertisement Asked why debt servicing costs are not included, the spokesperson said: 'It [the Department] doesn't include debt servicing costs, which are under the remit of the NTMA'. The NTMA (National Treasury Management Agency) is the Irish agency which manages the state's assets. Let's think about that for a minute. The Department of Finance doesn't include the billions in debt servicing costs – which are real costs – because counting this is handled by a different state agency. Does that sound like a good reason to ignore billions in taxpayer funds spent? It would be one thing if profit and loss wasn't mentioned at all. But by saying taxpayers are actually in profit on the AIB/BOI/PTSB bailout, the Department's claims paint a misleading picture. Let's take a quick look at debt servicing costs for the three main banks. As of end 2021, the most recent figures available: AIB: €7.1 billion BOI: €0.7 billion PTSB: €0.7 billion That's an additional €8.5 billion. So rather than taxpayers being '€0.6 billion above break-even', we'd actually be about €8 billion down. Not even counting the additional debt costs paid since the end of 2021. It's also telling how the Department chose to highlight the 'investment' into AIB, Bank of Ireland and PTSB. It didn't mention the other two lenders we bailed out 'invested' in at the same time. This pair, of course, was Anglo Irish Bank and Irish Nationwide (INBS). Between them, they received bailout funds of €34.5 billion. The state has recovered about €1.1 billion of that amount. The remaining €33.4 billion is officially deemed an 'unrecoverable sunk cost'. Anglo and INBS were merged into a new state-owned entity called the Irish Bank Resolution Corporation (IBRC), which is trying to get anything it can back for taxpayers. So it's perhaps understandable why the Department would prefer to forget about these two when talking about how well we are doing on our banking 'investment'. Let's do a quick rundown of where things actually stand when looking at the Irish state's banking 'investments' – when including debt servicing costs. AIB – loss for the state. Likely in the region of €8 billion BOI – profit. Approximately €1.4 billion PTSB – state still holds 57% stake, currently valued at €600 million. State will likely finish at a loss of about €1 billion. Possibly less, depending on how much it ultimately sells the shares for. IBRC – loss. Likely in the region of €35 – €40 billion once all costs are included. Briefly returning to AIB. Seeing as the Department of Finance consistently refers to the bank bailouts as 'investments', it's worth briefly considering them as such. If someone invests €20.8 billion in 2010, and receives a payout of say €20.8 billion in 2025, how did they fare? Well, you *could* say they broke even, on a 'cash in, cash out' basis. But in reality, they lost money due to inflation. €20.8 billion in 2010 is worth the same as about €27 billion in today's money. And that's on top of… something… oh yeah, billions in debt servicing costs! How do we keep forgetting those pesky charges? When the government continuously forgets them as well, it can be hard to remember! We're down billions None of this is necessarily to say that bailing out the banks was the wrong move. The Irish state got something valuable for the AIB bailout. It ensured one of the country's main lenders didn't collapse. It also got a decent amount of the bailout money back in the end. At least, from AIB, PTSB and BOI. Likely a good bit more than was expected during the crash. That's all fine. So why can't the government be happy with that, rather than trying to spin that we are around 'breakeven' on our AIB 'investment'? To its credit, AIB's statement on its return to private ownership didn't make any mention of the state's 'return on investment'. So if AIB hasn't tried to claim this, why has the government? Put simply – the government is trying to spin that taxpayers got a return on the bank bailouts. Three of them, at least. But we didn't. Even on those selectively-chosen three bailouts, we're down billions and billions of euro. When the government is trying to rewrite history, it should be called out for it. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
