July 18, 2009
Why is Allied Irish Banks in the ERRI?
Allied Irish Banks (AIB) conducts retail and commercial banking business in Ireland, with branches in the U.S., Germany, France, and Australia, among other locations. AIB conducts business through four operating divisions: AIB Bank Republic of Ireland division, Capital Markets division, AIB Bank UK division, and Central & Eastern Europe division.
In indexing banking sector recovery on the heels of major intervention in the largest U.S. banks by the government it is necessary to look outside the likes of Bank of America and other institutions influenced by TARP processes. AIB is roughly half the size of Halifax, which has had an outstanding YTD performance already.
AIB, which has traded at over $28 within the last year, was in disfavor with traders when it bottomed out in early March at $0.72/share. Stock price trends reflect “collective opinion” within the investment community. The 50 day Moving Average is rising, while the 200 day Moving Average is falling. Other indicators are mixed – as is true for much of the sector.
The financial sector represents just under 10% of the ERRI equity component. With $2 billion in market capitalization, AIB, a Mid-Cap stock, is initially weighted as 3.35% of the whole; the rest of the financial sector is represented by two regional banks, Comerica and Fifth Third Bank.
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