Collateral Damage from the Bank Collapse

Nat O'Connor: The Irish Independent has published a table of major losers from the fall of AIB bank shares. This is merely illustrative of the damage done to cautious investors who went for traditionally safe options. The table shows how €33 million in shares was reduced to 1.7 per cent of its former value.

If you extract named individuals and two firms from the list, it reveals that €25 million was held by religious organisations and charitable bodies; now reduced to €380,000. In some cases this money doubtless represents the funds raised over the years by these bodies. And, in terms of sensible finances, their boards of governance cannot really be blamed, as they went for a very sensible, safe option - in normal circumstances. The only fault might be if they didn't balance their portfolio. Of course, we don't know how many bodies might also have held shares from Bank of Ireland or the other banks.

Obviously, these shares may rise again over time, but they are unlikely to reach their previous heights. Also, the article dramatises the loss somewhat, as we don't know when the shares were purchased, or at what price. Plus, we don't know what level of dividend was paid over the years; which might have made the investment not so bad overall.

Nevertheless, there is a need in the economy for a safe investment. Government bonds, anyone?

Posted in: Banking and finance

Tagged with: banking

Dr Nat O'Connor     @natpolicy

Nat O’Connor is a member of the Institute for Research in Social Sciences (IRiSS) and a Lecturer of Public Policy and Public Management in the School of Criminology, Politics and Social Policy at Ulster University.

Previously Director of TASC, Nat also led the research team in Dublin’s Homeless Agency.

Nat holds a PhD in Political Science from Trinity College Dublin (2008) and an MA in Political Science and Social Policy form the University of Dundee (1998). Nat’s primary research interest is in how research-informed public policy can achieve social justice and human wellbeing. Nat’s work has focused on economic inequality, housing and homelessness, democratic accountability and public policy analysis. His PhD focused on public access to information as part of democratic policy making.