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Roundup-Irish Life cost 20pc more

Thursday, February 21 08:17:06

The Canadian insurers who bought Irish Life this week have paid nearly 20 per cent more for the company than they were prepared to do a year ago, Minister for Finance Michael Noonan said yesterday.

The purchase by Great-West Lifeco for E1.3 billion, plus a E40 million share of dividends, is evidence that Ireland has travelled "a reasonably good distance in the last couple of years", Mr Noonan told a gathering of the Irish International Business Network in London.

"The interesting thing is that, just 12 months ago, the same company was on the edge of closing a deal. Problems began to become prevalent. They backed off the deal, not because of anything to do with Ireland but because of the risk factor involved in investing in anything to do with Europe.

"Now they are back. The price last year was E1.1 billion. Today, it is E1.3 billion, plus a slight bonus on dividends. That tells you about the Irish economy," said Mr Noonan, who also yesterday met chancellor of the exchequer George Osborne.

The "effective" cost of financing the renegotiated promissory note debt is now 1 per cent, he said, because some of the interest paid to the Central Bank of Ireland will return as profits to the Department of Finance.

"Is it any wonder that there was a big knock-back on the cost of secondary paper? The ECB noted it without dissent. It is a legal agreement in accordance with treaty provisions. That was one good piece of work," he declared.

He said the Government had not requested the UK reduces the interest rate it charges on the bilateral loan given in 2010, but Mr Noonan is hopeful a cheaper rate can be put in place. The Irish Times

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Bank of Ireland has launched a major review of its staff defined benefit pension funds to tackle a near E1.6 billion deficit in group schemes.

This follows a quadrupling of the deficit in 2012 due to weak bond yields and technical issues as to how the bank is now required by regulators to account for its pension deficit.

In a memo to staff yesterday, Bank of Ireland chief executive Richie Boucher said "difficult choices and decisions" would be required to deal with the deficit in its pension schemes in 2013.

"Our first step will be to define what options are open to us," Mr Boucher told staff. "I know how important your pension is to you, and we will keep you well informed and involved in what is happening."

The crisis comes just three years after a number of significant changes to the pension schemes were introduced. This had the effect of reducing the deficit from E1.5 billion to E400 million by the end of 2011. The Irish Times

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World equity markets faltered on Wednesday as a mixed reading of U.S. housing data took the edge off this year's stock rally, while oil prices fell as the prospect of increased Saudi supply offset optimism spurred by an improving worldwide economy. A measure of world shares rose above a peak set in May 2011 to trade at highs last seen 4 1/2 years ago, before paring gains. Investors were cautious with minutes from the Federal Reserve's most recent meeting due for release later in the day.

Global equity markets have surged over the last seven months as major central banks repeatedly delivered monetary support to weak economies.

MSCI's all-country world equity index hit a session high of 359.37 before paring gains to trade at 358.21, 0.04pc higher on the day. The Irish Independent

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Independent News & Media (INM) chairman Leslie Buckley last night said the company is currently in "constructive and ongoing discussions" with its banks and is committed to securing a "consensual solution" on this basis. Mr Buckley was responding to a newspaper report suggesting there may be political opposition to any restructuring of the company's debts.

In an article which appeared under the headline 'Unease in Government over INM debt-relief moves', the 'Irish Times' quoted "government sources" as being "apprehensive" about the potential restructuring.

However, in a statement, Mr Buckley said the article was "sorely lacking in context".

"INM is an operationally strong and well-managed company yet its survival is threatened by a legacy of excessive borrowings and poor decisions . . . all of which pre-date the current board," he said. The Irish Independent