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Roundup-IBRC hopes to return E8b

Thursday, November 01 08:09:40

Management at Irish Bank Resolution Corporation, formerly Anglo Irish Bank, are hopeful that it could return up to E8 billion to the State once it has run down the former Anglo and Irish Nationwide loan books. The bank told the Oireachtas finance committee that the final cost of Anglo to the State could be "closer to E25 billion", which is lower than the previous E29 billion to E34 billion estimated in September 2010. Management at the bank said there could be a E4 billion saving on the original estimated cost and a further E4 billion returned to the State that the bank must hold for regulatory purposes.

Alan Dukes, the chairman of IBRC, told the Oireachtas committee the bank was "reasonably hopeful" the final cost could be about E25 billion and the bank could be wound up before the target end-date in 2020, but he declined to say when. The lower cost was "highly contingent" on a number of factors: what happens to property markets in Ireland and the UK; the economy; the euro zone crisis; and the restructuring of the promissory notes used by the State to spread the cost of Anglo out. Bearing these in mind, Mr Dukes said the bank believed it has "reduced the expected final cost of the operation to the taxpayer by an appreciable amount". The Irish Times

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AIB's net interest margin must double if it is to return to full financial health and attract investors, the bank has told the Oireachtas finance committee. A senior AIB executive told the committee that the bank had to wean itself off the Government bank guarantee, raise loan interest rates and reduce deposits if it is to return to profitability by 2014. Fergus Murphy, AIB's director of products, said the State-owned bank's net interest margin was in the "mid-80s" basis points currently and had to increase to more than 150 basis points over time.

He told the Oireachtas Committee on Finance, Public Expenditure and Reform that the bank was still losing money on its standard variable rate mortgages despite increasing the rate to 4 per cent. The bank's cost of funding was about 3 per cent and additional costs meant AIB was paying out a rate of 4.1 per cent. AIB chief executive David Duffy said the bank's mortgage rates could increase to between 5 per cent and 6 per cent over time. The Irish Times

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Five lenders have offered to take over E821 million worth of lending secured on three luxury hotels at the centre of a legal battle between property developer Patrick McKillen and billionaire Barclay brothers David and Frederick. The disclosure about McKillen and the Berkeley, Connaught and Claridges hotels was made by Mr McKillen's spokeswoman, Breda Keena, in an interview with Bloomberg. The issue was discussed yesterday by the board of Coroin, the company that owns the Maybourne Group, which owns the three luxury hotels. Mr McKillen has a 36 per cent share in Coroin, though the Barclays now have a majority since they control financier Derek Quinlan's stake in the company.

Barclays hold the £660 million (E821 million) debt on the company, following their purchase of it from the National Asset Management Agency (Nama) in 2011 - a deal Mr McKillen has strongly questioned. Last night, it was rumoured in financial circles in London that one of the lenders is a company associated with the Qatari royal family and that it has offered funds for a cheaper rate than is being paid to the Barclays. The Qataris were linked with Mr McKillen in earlier attempts to take full control of the group, while the High Court in London was told he had negotiated a multi-million fee for himself if that bid had succeeded. Coroin, however, declined to give any details. "Unsurprisingly, we are not going to be making any comment on this. Coroin is after all a private company and under no obligation to disclose such information to the press." The Irish Times

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Shares in Kerry Group fell after the food giant marginally cut its full-year earnings guidance and said it was dealing with ongoing problems in its Irish consumer foods sector. In an interim management statement covering the nine months to the end of September, the Tralee-based company said it now expected to post earnings per share growth for 2012 of between 9pc and 11pc, down slightly from the 8pc to 12pc it had previously indicated.

The company, which is creating 900 jobs at a research plant in Kildare, said it recorded "good organic growth" across all its business during the year so far, but had had to deal with "challenging market conditions in Europe and the continuing competitive consumer foods market situation in Ireland and the UK". For the year so far, revenue climbed 10.9pc to E4.4bn, while on a like-for-like basis business sales were up 2pc. Trading profit is up 12.1pc year on year, even as the company dealt with what it described as "unallocated" development costs relating to an internal restructuring that has been going on for some time. The Irish Independent

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Consumers were slightly more pessimistic about their household finances in October, but their outlook on the economy showed slight improvement. Concerns about December's budget were blamed, as well as hikes in electricity and gas prices. By contrast, reports on Ireland's economic progress and tentative signs that the housing market was stabilising left people a little more optimistic on the economy. The KBC Bank Ireland/ESRI Consumer Sentiment Index recorded a slight increase as the positive views were offset by household financial concerns.

The index edged up fractionally to 60.9 in October from 60.2 in September. Austin Hughes of KBC Bank Ireland said that while it was encouraging that consumer sentiment rose marginally, consumers had become more nervous in recent months. Despite the positive indications, the data showed that the underlying trend, recorded via a three-month moving average, was downward. The Irish Independent