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Roundup-Irish deposits abroad soar

Wednesday, March 20 08:13:47

Ireland is making use of a secret arrangement between euro zone central banks to ensure its controversial debt swap doesn't fall foul of a ban on monetary state financing, three people familiar with the matter said. There are limits on how many of its own government's bonds a euro-area central bank can hold in its investment portfolio to make sure it doesn't directly finance the state, the people said on condition of anonymity.

Ireland's Central Bank risked exceeding that limit when it assumed E25 billion of government debt as a result of Ireland's seizure of Anglo Irish Bank, they said. To avoid breaching the rules, the Central Bank will be allowed to borrow unused capacity from counterparts in the 17-member currency union, the people said. One suggested the extra capacity would be provided by the Eurosystem as a whole rather than from individual central banks that have room to spare in their investment portfolios. The procedure is permitted under the confidential Agreement on Net Financial Assets, or ANFA. The Irish Times

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The amount of money deposited by Irish savers in overseas banks doubled in 2010 as the euro zone sovereign debt crisis took hold, new statistics from the Revenue Commissioners show. In 2010, some E 235 million was placed on deposit in overseas banks by some 901 individuals or couples, up from E117 million in 2009, as savers and investors looked to diversify their holdings away from Irish banks and the euro currency. In 2008, just E89 million was held in foreign bank accounts, according to information compiled by the Revenue from income tax filings.

Tax payers filing on a self-assessed basis must disclose information on foreign bank accounts, as interest earned is subject to income tax, rather than deposit interest retention tax, as is the case with domestic deposits. The aforementioned figures do not include PAYE taxpayers, who may have declared their foreign bank holdings through their local tax office. The Irish Times

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Lloyds Banking Group is considering the sale of about E650 million of Irish real estate loans as the lender extracts itself from Western Europe's biggest property crash, according to a person with knowledge of the planned transaction. The UK's second-biggest government-aided bank will have to sell at a discount, the person said without being more specific. He declined to be identified because the sale plans haven't yet been finalised. Lloyds spokesman Ian Kitts, declined to comment.

In 2010 Lloyds began to run down and close the Irish unit it acquired two years earlier as part of a takeover of HBOS. More than 90 per cent of its £7.4 billion (E8.6 billion) Irish commercial real estate loan book is impaired, according to the London-based lender's annual report. CarVal Investors agreed to buy E380 million of Irish and UK property loans from the bank at about 25 per cent of their face value in November. The Irish Times

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Australian financial services firm Pepper Asset Servicing is to take over asset management of E600m worth of loans from Danske Bank, cementing its position as a little-known but important player in the Irish market. The move will see Pepper manage loans on some 270 properties that are in receivership at the moment along with Arrow Asset Management, and "oversee the rationalisation of the receivership process for the portfolio and special servicing on behalf of Danske.

This is Pepper's second major foray into the commercial real estate asset management market in Ireland. The Australian firm set up here last September when it bought GE Capital's Irish subprime mortgage book and in January was appointed to manage E380m worth of distressed property loans that had been formally owned by Lloyds. The Irish Independent