Tags: Investors Pull Out of European Bank Stocks

Investors Pull Out of European Bank Stocks

Tuesday, 23 Nov 2010 01:36 PM

Shares of Irish banks and others from debt-struck European countries dropped Tuesday on worries that a debt crisis in the eurozone could spread after Ireland requested a massive bailout.

On Monday, Ireland asked for $135 billion from the European Union and International Monetary Fund to stop its banks from hemorrhaging cash and to help the country avoid bankruptcy.

The move set off fears that other heavily indebted European countries will have similar problems such as Portugal, Spain, Italy and Greece. The EU already gave Greece $150 billion in May to stave off bankruptcy. It also set aside $1.05 trillion for any other eurozone members facing imminent loan defaults.

Ireland's deficit is the highest in Europe since World War II. Its banks no longer can raise cash because they can't borrow from open markets. They lost big on reckless investments in overpriced real estate at home and abroad. Ireland's government tried to rescue them from bankruptcy by insuring their debt, but can't guarantee that without a bailout.

The stock of Allied Irish Banks PLC plunged 19 cents, or 17.2 percent, to 92 cents in afternoon trading. The Bank of Ireland's shares plummeted 53 cents, or 24 percent, to $1.69. Spain's Banco Santander declined 64 cents, or 5.7 percent, to $10.54. The National Bank of Greece lost 9 cents, or 4.5 percent, to $1.79.

The stock of U.K.'s Lloyds TSB Group PLC fell 9 cents, or 2.2 percent, to $4.01. Barclays PLC fell 51 cents, or 3 percent, to $16.78.

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