IRELAND - The National Pensions Reserve Fund (NPRF) has seen the value of its bank holdings plummet by more than 70% between January and July, according to a new report by Ireland's Comptroller and Auditor General.

The country's Department of Finance was also directed to invest an additional €10bn in Allied Irish Bank (AIB) and Bank of Ireland (BoI), underwriting a rights issue made by BoI in July.

According to the Accounts of the Public Services for 2010 released by the Comptroller and Auditor General's office, ordinary shares in BoI have fallen by 72% to 10.5 cents in the first seven months of 2011, while ordinary shares in AIB have declined by 67% to 10 cents.

Reflecting on the year to date, the Auditor General's report said the institutions' values had been "further impaired" by the end of July, coming after a share writedown on the holdings forced the NPRF to revise its 2010 returns downwards by 7 percentage points.

The report added: "In July 2011, the Minister for Finance directed that the €10bn be invested in Allied Irish Banks and Bank of Ireland and that the NPRF sell shares to the value of €1.05bn in Bank of Ireland to a group of institutional investors."

The €10bn had gradually been drawn from the scheme's discretionary portfolio in February and April and was at first placed in Irish commercial banks before being used to underwrite a rights issue by BoI.

AIB also received €5bn, invested in ordinary bank shares, thereby increasing the government's stake in the institution from around 93% to 99.83%.

While Auditor General did not offer an update on the NPRF's current value, its portfolio was valued at €20.8bn at the end of June.

Since then, shares in Allied Irish Bank have fallen by 68% to 4.5 cents at close of trading yesterday, while BoI's share price fell by almost 35% between June and 16 September.