How Can This Valueless Irish Bank Have Such an Enormous Market Cap?

Considering Allied Irish Banks' near total government ownership and massive amount of debt, how can this stock have such a large market cap?

David Hanson
David Hanson and Matt Koppenheffer
Jan 28, 2014 at 8:11PM
Financials

In this video from Tuesday's Where the Money Is as part of the Motley Fool's "Ask a Fool" series, Fool banking analysts Matt Koppenheffer and David Hanson take a question from a Fool reader, who asks, "If Allied Irish Banks (NASDAQOTH:AIBYY) in Ireland is 99% owned by the state and almost valueless in piles and piles of debt, how can it have a market cap of greater than $100 billion?"

With an abysmal 34% non-performing loan ratio, AIB could seem like a very questionable investment. But with so much of the stock being government-owned, Matt's opinion is that the few shares remaining on the market are subject to a lot of speculation by day-traders, and that's the force that's determining the stock's share price on the market today. Matt and David warn that this unusual situation is one investors would do very well to stay away from.