Opening Up Irish Bank & Country Books (IRE, AIB, IRL)

We are so far seeing a mixed reaction in the Irish bank trading in ADRs today.  The Bank of Ireland (NYSE: IRE) is down 3.9% at $2.22 and Allied Irish Banks plc (NYSE: AIB) is up 4.5% at $1.15.  Perhaps the thought is that things might be worse at the less-bad bank and less-bad at the lowest bank of the two.  The quote in local terms in Ireland shows Allied Irish Banks up closer to 2% and the Bank of Ireland shows that it is up 1.5%.  A fund for U.S. investors is The New Ireland Fund, Inc. (NYSE: IRL) and its gain of 35 to $6.52 is taking it off of yesterday’s lows.  Its 52-week range is $5.55 to $7.91 and it trades only about 25,000 shares a day.

This is likely yet one more aim to prevent the focus on the PIIGS spreading like wildfire to Greece, Portugal, and Spain.  There is a real risk here that is impossible to ignore even if this formal inspection is the right thing to do.  The problem is no different than the joke about grandma and grandpa walking bare through the house at Christmas; the family is suddenly not too happy about where they came from.

Ireland is in the midst of major austerity cuts and officials from Ireland and the E.U are trying to stabilize the Irish banks.  The goal, outside of saving everyone and putting huge pressure on the E.U. and particularly the PIIGS, is to restore Eurozone confidence.  While The United Kingdom is not a part of the Euro, the Brits have offered help as well.  Ireland has maintained that it does not want a bailout.  The country seems leery of the IMF aid because the constraints that can be attached.

Peeling onions usually leads to crying.  There is a good chance that we’ll get to know very soon just how strong the onions are in Ireland.  Unfortunately, potato analogies are too hard to come by.

JON C. OGG