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Irish Life Shares Drop After Reports Irish Govt

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mlkrborn   Tuesday, 03/29/11 03:56:25 PM
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Irish Life Shares Drop After Reports Irish Govt May Take Major Stake
11:28a ET March 29, 2011 (Dow Jones)
Irish Life Shares Drop After Reports Irish Govt May Take Major Stake

DUBLIN (Dow Jones)-Shares in Irish Life and Permanent Group Holdings PLC (IL0.DB) slumped more than 40% in Dublin trading Tuesday amid fears that the Irish government will be forced to take a large controlling stake in Ireland's largest pension and mortgage provider when the results of industry-wide stress tests are disclosed later this week.
Reports that the stress tests on Permanent TSB, the banking unit of the Irish Life group, would show a capital shortfall of between EUR600 million and EUR1 billion had led to the sharp fall in the share price, said Oliver Gilvarry, head of research at Dolmen Securities.
"We would expect, if the figures are correct, that the government would own over 90% of Irish Life," Gilvarry said. Such a scale of state ownership would leave a rump of shares trading on stock markets, he said.
Last year, the Irish government increased its stake to over 92% in Allied Irish Banks PLC (AIB), once the country's largest general lender, when previous stress tests showed the bank required large levels of capital to make good its loan losses amid Ireland's economic crisis. The government also owns 36% of Bank of Ireland.
Irish Life and Permanent is one of four banks undergoing stress tests by the Irish central bank that are attempting to identify the potential loan losses in the Irish banking system, in particular in loans to distressed mortgage borrowers. Irish Life has to date received no direct capital injections from the Irish government and has remained so far independent of state ownership.
The results of the stress tests will be disclosed Thursday. A spokesman for Irish Life was not immediately available for comment. A spokesman for the Irish finance ministry said he could make no comment on the reports.
Shares in Irish Life were trading in Dublin Tuesday at 40 cents, down 45.4% at 1520 GMT.

By Eamon Quinn, Dow Jones Newswires; +353 1 6762189; eamon.quinn@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/nae/al?rnd=63mBhdcGvJDz%2BpdFfElS9g%3D%3D. You can use this link on the day this article is published and the following day.


(END) Dow Jones Newswires
03-29-11 1128ET
Copyright (c) 2011 Dow Jones & Company, Inc.BT201103290056082011-03-29 15:28:00.0007TP14CKLPPUSD7I1MRSP55MQTLDJNF
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March 29, 2011
11:28a Irish Life Shares Drop After Reports Irish Govt May Take Major Stake Dow Jones
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