Wednesday, October 17 08:13:50
The Central Bank has strongly criticised banks for their slow progress in tackling the mortgage crisis, saying the extent of their efforts to fix the problems showed that "wait and see" had become the strategy of choice for lenders. In a strongly worded speech to a conference of bankers, the Central Bank's head of banking regulation Fiona Muldoon said that the banks were behaving like teenagers in responding to its requests to deal with the problem with mortgages.
"The Central Bank has led on the issues; the banks have waited to be told what to do and not particularly liked it when we have done just that," she told the Irish Banking Federation conference. Lenders have been told to offer long-term forbearance products to struggling mortgage holders. The secretary general of the Department of Finance John Moran said the banks would have to forgive some mortgage debt that customers could not repay. There had to be "solutions that involve much more dramatic write-off of debt in respect of households that are really in non-sustainable situations and have an inability to repay", said Mr Moran. Revealing for the first time that 48,000 buy-to-let mortgages with E13 billion of debt were in some kind of financial difficulty, Ms Muldoon berated the banks for failing to do more to address the crisis. The Irish Times
The burden of recapitalising European banks may have to be taken on by the European Union, a senior German banker told a meeting in Dublin yesterday. Dr Joachim Faber, chairman of the supervisory board of the Deutsche Borse and a senior adviser to Allianz SE, said that such a measure was "very difficult" from a policy point of view, but Europe will "probably have to be pragmatic". Dr Faber, who was appointed to the board of HSBC Holdings plc earlier this year, told the inaugural meeting of the Institute of Directors' "Thought Leadership Series" that a prudent regulatory regime will have to accompany any such move.
He said Ireland's deficit reduction plan probably needed some unconventional measures to make it manageable. Otherwise the risk was too large that the plan would not succeed and that Ireland would not have growth but rather more contraction. German industry had a very clear understanding of the competitive benefits that accrued to it as a result of being in the euro, he said, and it was very vocal on the matter. He said the German chancellor, Angela Merkel, has a very good sense of what the majority in Germany was thinking. He said the views of the population had shifted considerably under her leadership over the past two years and he had "no doubt but that Germany will shoulder its responsibilities".
Outside Europe, there was a general view that the EU was a matter of months away from "going under", but he believed the EU was as much an opportunity as it was a problem. However, Europe needed to be ready for a major step forward. The entire union was in danger of being undermined if necessary structural reforms were not introduced. The Irish Times
The Public Prosecution's office in Bergamo, northern Italy, has accused Ryanair of tax evasion, estimated at E12 million. Speaking to The Irish Times last night, Bergamo state prosecutor Maria Mocciaro said she expected to bring formal charges against Ryanair, chief executive Michael O'Leary, and the company's legal adviser Juliusz Komorek, "very shortly".
In essence, the state prosecutor argues that Ryanair has been treating its 220 employees at Bergamo's Orio al Serio airport as "Irish" employees, with an Irish contract signed in Dublin. That way, the company has paid a lower rate of social security contributions, given that the Italian rate is 37 per cent as opposed to 12 per cent in Ireland. Ryanair may well argue that it does not have permanent Italian headquarters and that its employees work for an Irish-registered airline. The state prosecutor, however, argues that the employees, to all intents and purposes, work in Italy and that therefore their social security contributions should be paid in Italy.
The investigators also point out that Ryanair requires its Bergamo employees to live within one hour's drive of the airport, while 112 of the 220 personnel who feature in this two-year long inquiry list their official residence in the greater Bergamo area. Ryanair's position has further been complicated by the initial findings of a separate inquiry by the Guardia Di Finanza in Bergamo which claims that various Ryanair employees have registered with the Italian social security and pensions institute. The finance police believe that employees requested the right to avail of the Italian national health service, a so-called AI document. The Irish Times
An Irish exploration company may face a stock exchange investigation after the firm's share price increased sharply ahead of a public announcement yesterday. Shares in Fastnet Oil & Gas surged more than 80pc in Dublin and nearly 40pc in London in the past fortnight. The company then announced yesterday the Moroccan government had signed off on a farm-down of part of its licence in that country. Last night, a spokesman for the Irish Stock Exchange said it did not comment on individual companies as a matter of course. It does, however, investigate unusual share price movements when they arise.
Fastnet chairman Cathal Friel strongly denied any suggestion of impropriety and pointed to renewed activity by the company at investor road shows and similar presentations. "We have been out on the road in the last fortnight and have been speaking to a lot of potential investors, which we hadn't done in the weeks prior to that," he said. The company gave a presentation to private clients of Dolmen Stockbrokers earlier this month, a number of whom are believed to have bought into Fastnet afterwards. Shares in the company had been almost flat during August and September before jumping sharply on increased volumes since the start of this month. The Irish Independent
Ireland's return to borrowing on the markets is set to continue tomorrow with the latest issue of E500m of short-term government debt. The National Treasury Management Agency (NTMA), headed up by John Corrigan, said it plans to place E500m of three-month "treasury bills" -- a type of short-term borrowing -- with investors tomorrow. Investors who backed a E500m sale of similar debt in July were repaid in recent days and are likely to form the bulk of investors in the latest deal.
Tomorrow's auction will be the third deal of its kind including the July sale, when the state "dipped its toe" back into the markets for the first time since before the 2010 bailout. The short duration of the IOUs being sold, which are known as "bills", makes it an extremely low-risk deal for investors, but the borrower, in this case the state, needs to constantly replace the debt through regular auctions. The Irish Independent