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Roundup-Don't do it Ireland's way !

Friday, September 07 08:12:35

IBRC chief executive Mike Aynsley has advised the Spanish authorities not to follow Ireland's lead and create just one bad bank but to consider a number of bad banks to tackle the country's banking crisis. In an interview with The Irish Times, Mr Aynsley said he has been in contact with senior officials within the Spanish authorities as Madrid attempts to deal with its deepening banking crisis and devise ways of purging soured loans from its struggling lenders.

He advised them to be "broader minded" and consider setting up bad banks, not just one bad bank as Ireland did with the National Asset Management Agency. "What you are really looking at doing is a clean-up of the banking system, not a partial clean-up of the banking system," he said. "Looking back for Ireland, yes it [Nama] was the right place to start but it wasn't, in retrospect, a broad enough look at the extent of the problems that were emerging in the banking sector." The failure to remove all the problem loans from the Irish banks froze new lending and created a perception the banks were still broken, said Mr Aynsley. The Irish Times

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The number of Irish people holding private health insurance continued to decline in the year to June, with 61,000 less people insured than in June 2011. Figures released by the Health Insurance Authority (HIA) yesterday reveal 2.123 million people - or 46.3 per cent of the population - now hold private health insurance. This represents a drop of 16,000 since March and a decrease of 61,000, or 4 per cent, since June 2011. The number of people holding private health insurance peaked in 2008 at 2.3 million, but has been in decline since.

The HIA data shows Aviva continued to increase its share of the health insurance market last year. In 2011 the insurance multinational grew its market share in Ireland to 17.7 per cent, up from 13.7 per cent previous year. Over the same period VHI Healthcare's market share fell from 61.6 per cent to 57.3 per cent, continuing a pattern that has seen the State health insurer's market share fall steadily since 2008 when it held 66.8 per cent of the market. In contrast, the figures show that Quinn Healthcare - renamed Laya Healthcare earlier this year - was not unduly affected by the difficulties of its tied agent Quinn Insurance, which was placed into administration in 2010. The Irish Times

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Moody'slowered the maximum rating it will give bonds issued by Irish companies as the International Monetary Fund (IMF) warned that the Government needs to do more to explain its plans and bring health spending under control. Moody's said any bonds issued by an Irish company would now be rated no more than A3 because of the financial and economic risks in the country. The decision could make it harder for Irish companies to raise money overseas.

Large companies such as Smurfit Kappa are turning to the bond market to access lending as the banks continue to pull in their horns. The decision will have "limited ratings implications" for Irish companies, Moody's said in a statement that also downgraded the ceiling for bonds from Portuguese companies. Moody's rates sovereign bonds from Ireland and Portugal as "junk". Moody's decision came hours after the IMF said Finance Minister Michael Noonan should map out his medium-term austerity plans for the next three years when he announces December's Budget. The Irish Independent

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The European Central Bank (ECB) has unveiled its latest "big bazooka" with a commitment to help euro area countries by buying their bonds on the markets. Ireland will benefit from the latest move after ECB chief Mario Draghi said the bank will buy bonds of countries in bailout programmes that are trying to return to the markets, as long as they continue to live up to bailout targets.

Mr Draghi also said any coalition tension in Ireland is not a concern, but offered no update on Ireland's hope for a bank debt deal. "The Irish government has been an exemplary model of compliance, I am confident that whatever the tensions this will continue to be so," he said in Frankfurt. In a move aimed at reassuring the markets, the ECB said it will share the same risks as any other investor when it buys the bonds. That did not happen when Greece effectively defaulted on its debts that were held by the private sector but not debt owed to the ECB.

Dubbed "outright monetary transactions" there is no limit on the scale of the new bond buying programme. It will replace a previous bond purchasing programme that was shelved last year. The new move will create a "fully effective backstop", ECB President Mario Draghi said today. The ECB Governing Council agreed on the "modalities of outright monetary transactions", Draghi told a news conference after the Council's monthly policymaking meeting in Frankfurt. Seeking to back up his pledge to do whatever it takes to preserve the euro, Draghi said the new bond-buying programme, aimed at the secondary market, would "safeguard the monetary policy transmission in all countries in the eurozone area". The Irish Independent

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THE European Central Bank left its key interest rate unchanged this afternoon, disappointing 400,000 tracker mortgage holders. Economists had been split on whether the eurozone central bankers would drop rates this month, or wait until later in the year. There have been two cuts in eurozone rates in the last year, knocking E30 off the monthly repayments for every E100,000 borrowered. But the ECB left rates unchanged at 0.75pc.

There is now an expectation that rates will come down later in the year as part of plans to stimulate the eurozone economy. This month AIB pushed up its variable rates by 0.5pc for new and existing customers, while Bank of Ireland variable rates for existing customers will go up next month. The Irish Independent