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Markets News Afternoon: Somers to join AIB board: European Commission approves restructuring of bailed out banks Lloyds, ING and KBC
By Finfacts Team
Nov 18, 2009 - 5:05:29 PM
Dr. Michael Somers who is retiring as chief executive of Ireland's debt management agency, National Treasury Management Agency (NTMA), is to become deputy chairman of Allied Irish Banks (AIB).
NTMA's Somers and AIB appointments
The Minister for Finance Brian Lenihan TD, announced today that Dr. Michael Somers will retire as chief executive of the National Treasury Management Agency (NTMA) on December 3rd next. The Minister is appointing John C. Corrigan, director of the agency in charge of the National Pensions Reserve Fund, to be the new chief executive of the NTMA.
The Minister said Somers has served as chief executive of the NTMA since its inception in 1990 and has served for more than 48 years in the public service.
Lenihan expressed his profound appreciation and that of the Government for the enormous contribution Dr. Somers has made to the public service over almost five decades. "His contribution as chief executive of the NTMA over more than 18 years and before that in many public service positions, including Secretary of the Department of Defence and Secretary (National Debt Management), Department of Finance, has been outstanding."
It is the Minister’s intention to nominate Dr. Somers as a director of Allied Irish Banks (AIB), as an appointee of the Government.
The Minister said that AIB intend to appoint Somers to the position of deputy chairman.
Dan O’Connor, currently non-executive chairman of AIB, is to take on the role of executive chairman on a temporary basis in order to oversee AIB's work on the completion of the key tasks of capital raising, the transfer of loans to the Sate 'bad bank" NAMA and the EU restructuring plan.
Colm Doherty, formerly Managing Director, AIB Capital Markets, has been appointed AIB group managing director. Doherty will be responsible for the day to day running of the Group. He has agreed to take up his new role for a salary of €500k - - the limit set by the Minister of Finance.
AIB said his contractual remuneration package will therefore be considerably lower than applied in the past to the CEO role, or Doherty's previous role in AIB, "reflecting his personal commitment to the bank and its future."
AIB group chief executive, Eugene Sheehy, is to retire on November 30th.
European Commission approves restructuring plans of Lloyds, ING and KBC
The European Commission today approved restructuring plans for UK bank Lloyds, Dutch financial group ING and Belgium's KBC Bank - - which operates a mortgage bank in Ireland - - all three were beneficiaries of public bailouts.
The EU competition office ruled that the proposed restructuring measures were "compatible with the EU rules on state aid to remedy a serious disturbance in a member state's economy."
Lloyds has announced that it will offload branches in Scotland, its Cheltenham and Gloucester branches, and the Intelligent Finance online unit.
ING has been forced to sell off its insurance operations and raise €7.5 billion - - €5 billion of which would go to paying back its government emergency funding.
The banks received substantial state bailouts after the Lehman Brothers collapse last year. The restructuring measures were designed to make them viable banking operations without negatively impacting competition.
KBC "foresees structural and financial restructuring through the divestment, run-down and listing of various businesses," according to the EC.
The bank has been forced to "divest or run down a significant number of businesses, including in Central and Eastern Europe. Furthermore, it will divest a banking business (Centea) and an insurance business (Fidea) in Belgium," the EC announced.
Commission approves asset relief and restructuring package for KBC
US President Obama reached the end of his China visit Wednesday and will head to South Korea next in the last leg of his four nation Asia tour. David Satterwhite from Fulbright Commission Japan told CNBC Obama's visit to China was "absolutely crucial" and "went off very well."
In coming months, the Commission will set terms for the Irish public support for AIB, Bank of Ireland and Anglo Irish Bank.
Neelie Kroes, European Commissioner for Competition Policy said in a speech today: " there are of course a number of important common principles which underpin the Commission's approach to these cases, and which guide us in all our actions in this area.
we want viable long-term business models
we want to minimise taxpayer burdens and
we don't want problems exported across borders.
We also make sure that we apply proportionate treatment to all cases. The more distortive the aid, the greater the measures we require in terms of divestments or other commitments to reduce activities.
If it is not already clear, I want to spell out today that, as in banking as in all markets, excessively risky behaviour has consequences. There is no such thing as a free lunch and today's restructuring announcements reflect that.
Our policy is encourage vibrant but responsible competition in the banking sector.With today's Commission decisions, and others that will follow, we are now well on the way to putting the European banking sector back on a viable long-term footing."
Spencer Rascoff, COO of Zillow.com, and Howard Glaser, former HUD official, discuss whether the housing recovery has stalled:
US markets
US home construction fell sharply in October, wiping out the gains of recent months as uncertainty over renewal of a tax credit for first-time house buyers prompted caution among builders. Meanwhile, US consumer prices rose at a moderate pace in October.
In Europe, the Dow Jones Stoxx 600 is down 0.20% Wednesday.
In Dublin, the ISEQ has risen 0.14%.
AIB has risen 3%; Fyffes is up 9% after it was reported that the European Union is “on the verge” of resolving its 16-year-old dispute with Latin American countries over the bloc’s import tariffs on bananas, quoting Trade Commissioner Catherine Ashton said.
On the New York Mercantile Exchange, oil for December delivery is trading at $79.92 up 78 cents from Tuesday's close. In London, Brent crude for December delivery is trading at $78.38 a barrel.
Currencies
The euro is trading at $1.4980 and at £0.8940.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
President Obama has arrived in Seoul for talks focusing on the economy. CNBC's John Harwood has the details:
