Irish bank stocks likely to gain further

DUBLIN: Irish bank stocks, the biggest losers in Europe in the first quarter, have been the best performers since March as investors bet the government will rescue the lenders without punishing shareholders.

Bank of Ireland surged 14-fold in Dublin trading through June 19 from a record low of 12 cents on March 5. Allied Irish Banks Plc jumped 641 percent in the same period, while the Bloomberg Europe Banks and Financial Services Index rose 82 percent.

Irish banks may gain further should the government swallow most of the losses on the lenders' souring property loans, as seems increasingly likely, JPMorgan Chase & Co analysts said in a research note on June 17. Irish Finance Minister Brian Lenihan will lay out plans for a so-called bad bank, known as the National Assets Management Agency, by the end of the month.