Tuesday, October 09 08:52:15
The ISEQ opened brightly early this morning only to follow European markets lower as growth concerns re-emerge. The ISEQ stands at 3,294, down 3 points.
Whether Ireland gets it's deal on bank financing is discussed this morning by NCB Stockbrokers:
The political machinations around a potential deal to ease Ireland's debt burden are continuing, with officials lobbying on the twin fronts of a potential ESM recapitalisation of the banks and also on the burden of the promissory notes. On the former, while the statement that followed the June Eurogroup summit suggested that an arrangement was near, subsequent comments about its applicability to 'legacy' issues from the finance ministers of Germany, Finland and the Netherlands appear to have put a spanner in the works.
Yesterday, the head of the ESM, Klaus Regling (no stranger to issues pertaining to the Irish banking sector), conceded that while the June statement opened the door to bank recaps from the ESM, he added that whether or not this applies to legacy problems "has not been discussed by any European bodies". With clarification on this issue unlikely to be reached until after the establishment of a new supervisory body for Eurozone banks, this is an issue that looks like it has further to run.
With regard to the promissory notes, which will consume a sum equal to 2pc of Irish GDP per annum until they are cleared, the Irish Finance Minister said that a "statement of intent" from the ECB on a possible deal would help with his budgetary arithmetic (given that prom note interest payments, following a 2 year interest holiday, will reappear on the general government balance from 2013 onwards).
The next prom note payment is due in March, while Budget 2013 will be unveiled in early December, so an early resolution would clearly be very welcome. However, as we have recently seen with the fall-out from the June Eurogroup statement, actions speak louder than words according to NCB Stockbrokers.