Shares in Allied Irish Banks and Bank of Ireland halved on Monday amid investor fears that the Irish government may be forced to nationalise the two largest domestic lenders. Bank of Ireland shares fell 54% to 34 cents while AIB fell 58% to 60 cents and Irish Life & Permanent, the country’s biggest bancassurer, fell 45%. The sell-off follows last week’s decision to nationalise Anglo Irish Bank, the country’s third-largest bank. One analyst said investors were “spooked” by the government’s handling of the Anglo Irish crisis, while others noted that the share collapse increased the likelihood of a full-blown nationalisation, as banks would now struggle to raise sufficient capital via rights issues.
