Business Briefs In echo of Elan, market burns small AIB investors

By Stephen McKinley

Opportunist buying of AIB stock in the wake of the Baltimore scandal has backfired.

Two large institutional sales, one for 1 million shares, sent the stock further down by 1.8 percent. Small time investors who had bought stock after the initial fall, would therefore have lost money in the short term.

The pattern was similar to what happened after Elan’s accounting practices were called into question by a Wall Street Journal story: the share price fell, buyers swooped, and the price fell further.

AIB woes

Allied Irish Bank staff could lose out on a collective euro 22 million if the bank is bid for in the next year.

Staff who received stock options in 1999 may not be able to exercise them if a bidder for the bank comes along, because of certain rules.

Banker’s union worried

The Irish Bank Officials Union said that it is deeply concerned about the news of John Rusnak’s $750 million losses at the Baltimore subsidiary of Allied Irish Bank.

But it also said that AIB had offered reassurances that the bank is in no way fatally compromised by the loss, and that it is in a “sound position.”

AIB is the parent company of First Trust, which employs 2,446 people in Northern Ireland.

IBOA general secretary Larry Broderick called upon all of the country’s financial institutions to carry out an immediate review of their internal control mechanisms.

“The findings of these reviews should be reported to the central banks or an independent financial regulator,” he said, adding that he was “extremely concerned” that one individual could expose staff and customers to such a massive loss.

Goldman tips

New York construction group CRH has been tipped by Goldman Sachs as a company likely to fare well in the future. Goldman suggested that reconstruction at Ground Zero and the prospect of a Second Avenue subway line down Manhattan’s east side, would auger well for the company.

Goldman also raised its share price target for Ryanair from euro 6.50 to euro 7, and retained the stock as a listed “market outperformer.”

Ryanair’s third quarter results showed that its cost control measures far outweighed the impact of its intense post-Sept. 11 promotional campaign.

Ryanair also brokered a much better than expected deal for new aircraft with Boeing.

Rose-tinted scandal?

The Open Republic, Ireland’s free-market think tank (www.openrepublic.org), asked last week if the Irish government had given euro 320,000 to the Rose of Tralee festival, in order to enhance Fianna Fail’s election chances in Kerry.

The Open Republic points out that as the festival nets a total of euro 25 million for Tralee annually, and costs a mere euro 1.25 million to stage, why is the government continuing to give the tiny sum to the festival at all?

The Open Republic also has a shot at AIB, asking if the initials stand for Acquired Immunity Banking, the implication being that were AIB to face any more rough times ahead, that the government would bail out the bank with taxpayers’ money, as it has done with other semi-state companies in Ireland in the past.

Slice of the North

Domino’s Pizza is planning to take a big slice of the Northern Irish market, by opening two new outlets by 2006, adding another 60 jobs.

Domino’s already owns two stores in Northern Ireland, one in Belfast, and the other in Bangor.

Credit controlled?

Directors of the Irish League of Credit Unions have been trying to get expense-account details claimed by other directors, so far with no success.

The row is turning into a dispute over an alleged lack of transparency in the union, according to the Irish Times.

Discontent over lack of transparency on the issue is understood to have led to the board’s first failure, in its history, to unanimously agree on signing-off on the league’s annual accounts.

Attack on Iran

Nineteen Northern Irish companies headed to Iran last week in an attempt to create business links and foster trade between the two countries.

Engineering, plastics and dairy companies were well represented, as well as oil and gas researchers.

Bill McGinnis, former president of the Northern Ireland Chamber of Commerce, led the delegation.

“We’ve been very encouraged by the response of the Iranian authorities in Tehran and London,” he said. “The oil and gas exploration and downstream processing industries offer a very substantial business opportunity for Northern Ireland suppliers. Iran is currently the second largest oil producer in the Organization of Petroleum Exporting Countries and has the world’s second biggest natural gas reserves.”

New trains, lawsuits

Translink, the Northern Ireland rail service carrier, has offered a contract for 23 new sets of rolling stock.

One of the bidders, Adtranz, has become embroiled in a _500 million damages claim.

A legal row has erupted over the valuation put on Adtranz by its German owners, DaimlerChrysler, when it was sold to Bombardier last year.

Bombardier, the Canadian company whose interests include Shorts in Belfast, is seeking _500 million damages from DaimlerChrysler because it claims it was overcharged.

Bombardier, which is based in Montreal, paid $1.1 billion (Canadian) for Adtranz and the acquisition made Bombardier the world’s biggest railway equipment maker.

A spokesman for Translink said they were aware of the issue but added: “This will have absolutely no bearing on the process in which we are engaged.”