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Wednesday Newspaper Review - Irish Business News and International Stories - - June 26, 2013
By Finfacts Team
Jun 26, 2013 - 8:52 AM
NEW Anglo Tapes reveal bank chief executive David Drumm joking with a senior
executive about the haemorrhage of funds from the institution hours before the
Government bank guarantee.
As his bank teetered on the brink of collapse, Mr Drumm is heard laughing:
"Another day, another billion".
He was referring to the flight of deposits out of the doomed bank before the
bank guarantee in September 2008 – running at over €1bn a day at the time.
Separately, in the wake of the furore over the revelations, it has emerged
cabinet ministers are weighing up a second referendum to give the Oireachtas
The Cabinet discussed at length yesterday how best to uncover the truth and
ensure there is accountability after the banking crisis that cost the taxpayer
CLAMOUR away, but you are unlikely to see a banking inquiry anytime soon. The
Government has tried to subdue your anger at the revelations contained in the
Irish Independent's Anglo tapes by announcing details of laws to set up an
inquiry by the end of the summer.
It has done so safe in the knowledge that it could be as late as 2016 before any
such inquiry kicks off, if at all.
This is because the Director of Public Prosecutions has already intervened in
the Quinn family's civil action against Anglo to advise against the running of
any parallel inquiry or court action that could impact on pending prosecutions.
Even if the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Bill
2013 is passed, politicians will not be able to make findings of fact against
any individual (other than office-holders) owing to the constitutional
parameters of the Supreme Court's Abbeylara ruling.
Deposits at the Irish covered banks fell by €2.8bn in May to €150.7bn, according
to new figures released this morning by the Department of Finance.
It said that the decline in the headline deposit figure compared to April was
due to a decrease in balances held in retail accounts in Ireland. Those declines
were spurred by a combination of factors, “notably the lower interest rate
environment and the improving funding position of the covered banks, which has
eased competition for deposits,” according to the Central Bank.
IRISH banks lost €500m every month last year, the International Monetary Fund's
representative in Dublin has said.
Peter Breuer told a conference that the losses needed to be reined in to avoid
having to pump more emergency money into AIB, Bank of Ireland and Permanent TSB.
The IMF's representative to Ireland also warned that the banks weren't building
enough capital to support new lending.
The warning comes as the State prepares for a fresh round of stress tests on the
banks early next year.
The assessments are aimed at gauging the banks' financial health and the level
of losses and future losses linked to defaulted home loans and property lending.
Latest figures show that one in four homeowners is struggling to make their home
The electorate may be asked to vote again to give more power to politicians to
conduct formal inquiries if the planned Oireachtas inquiry into the banking
collapse fails to get full cooperation from leading figures involved.
During a Cabinet discussion yesterday on the inquiry, Ministers debated the
option of asking the people to revisit the issue if the formula adopted for the
inquiry doesn’t work.
The development follows the release of tape recordings made inside Anglo Irish
Bank before and after the 2008 banking guarantee, which have intensified
pressure for an inquiry. Among other disclosures, the tapes suggest Anglo’s then
chief David Drumm was happy to abuse the guarantee.
It took almost five years, but the tapes of ex-Anglo Irish Bank executives have
finally put Ireland on the front page of the best-selling Bild tabloid.
“Irish broke bankers mock German customers — Deutschland Über Alles” is the
headline on today’s page one story.
“They mocked their customers even as they were doomed,” begins the story into
the Anglo tapes.
Though the bank’s ex-managers knew a state bank guarantee “would not be
enough”, they “made fun of the naïveté of German savers”, described them as
“Scheissdeutsche” and “sang the first verse of Deutschland, Deutschland Über
For years the influential Bild has adopted a moderate line on Ireland while
attacking “broke” Greeks, “crooked” Cypriots and other bailout candidates.
Yesterday marked the end of this kid-glove treatment.
The Taoiseach unveiled a major stimulus package for the toothless yesterday.
The rapacious bankers will be delighted.
Baring his gums in a fearsome manner, Enda Kenny responded to the public
outrage over the Anglo tapes by missing the point spectacularly.
He was so wide of the mark in the Dáil as to make us believe his misreading
of the situation had to be deliberate. Outside Leinster House, people are
furious with the arrogant suits who blithely joked about sticking them and their
children with a debt running to tens of billions.
Their laddish sniggering at the prospect of getting one over on the
regulators while their game-playing ultimately consigned this country to penury,
shocked the public.
The recovery in global banks’ balance sheets is under threat from a surge in
bond yields, according to senior bank executives and analysts.
Banks have built huge portfolios of liquid securities, partly at the behest
of regulators and also because they have not found better opportunities to lend
a flood of deposits.
Under new rules, unrealised losses in these “available for sale” portfolios
hit banks’ equity capital.
The demand for bank credit by SMEs remains low, although there was an
improvement in perception that banks are lending, according to the latest SME
Credit Demand Survey prepared for the Department of Finance.
The survey covers the period from last October to March.
Of the SMEs who had applied for credit at the date of the survey, there was a
60% approval rate. Excluding applications that were still pending, there was an
approval rate of 76%. However, the survey found that the conditions attached to
loans were becoming more punitive, including more personal guarantees.
Only 40% of SMEs requested at least one type of bank finance over that six-month
period, a 1% increase on the last survey in September and a 2% increase on year
The Government must not ease up in any fiscal consolidation this year, despite
growing political pressure for a softer budget, a conference heard yesterday.
At a special budget conference in Dublin yesterday organised by the ESRI, its
chief economist, John FitzGerald, said the Government had to proceed with €3.1bn
in budget cuts this year.
His fellow panellists, Peter Breuen, from the IMF, former government adviser
Alan Ahearne and Trinity College Dublin economics professor Philip Lane, also
called for the Government to stick to the existing strategy of reaching the 3%
fiscal deficit by 2015.
The restructuring of the promissory notes in February created roughly €1bn in
savings over the next two years. The Government plans to take €3.1bn out of the
budget this year followed by €2bn next year. On current projections this level
of adjustment would bring the deficit down to 2.2% by 2015.
Presseurop: According to the financial committee
of the French National Assembly, the state public spending deficit, which was
limited to €61.5bn in the 2013 budget, is expected to reach €80bn (4 per cent of
GDP instead of the 3.7 per cent planned) by end of the year.
In a report, the committee explains the failure to meet the spending target is
due to a reduction in tax revenue prompted by declining growth and incessant
fiscal changes, which have stalled France’s economy.
“There is no shortage of suggestions on how to make savings,”
points out Le Figaro.
Croatia's entry into the European Union,
scheduled for July 1, 2013, has rekindled the fear of an invasion of Croatian
workers, especially in Germany and Austria. The cliché
of east Europeans stealing jobs from west Europeans still has a bright future.
writes in Novi List, the Croatian newspaper, that in the small town of
Hohenthurn, in the Austrian province of Carinthia, near the Italian border, a
giant brothel is about to open. Its investors have announced that 140 sex
workers will be employed there. The town currently has only 800 inhabitants, and
the brothel will trigger a demographic boom in the region. The problem lies not
only with the "whores" but also with those (most of them immigrants) who will
fill the 40 administrative and logistic jobs, aimed at better serving the sex
workers as they go about their daily and nightly labour with their clients.
The investors in question, unnamed entrepreneurs from Switzerland and Germany,
have invested over €7m in the project. Their aim is to profit, as much as
possible, from the proximity of Italy where prostitution is illegal, unlike in
Austria where brothels are legal, sex workers are taxed, protected by the police
and benefit from public health services.
Euro Topics: The Finns are rapidly losing their reputation as a nature-loving
nation. According to a new survey, almost 50 percent of Finns are afraid of
wolves and bears. For the liberal Finnish daily Lapin Kansa the media is to
blame for all this panic: "The number of predators doesn't explain this fear.
There are a few more bears around nowadays, but the number of wolves has
dropped. Nor is urbanisation to blame, since not much has changed in this
respect. What's more, three out of four respondents are in favour of hunting
predators and one in two would kill one if it came near their home. The reasons
for this hysteria lie in the exaggerated debates. We live in a time when any
bear or wolf that happens to wander into a village generates headlines and calls
for help, even though the animals are no more dangerous for humans than in the
After the end of the Berlusconi era Italy lacks political alternatives, the
liberal Italian daily La Stampa notes: "The downfall of the Second
Republic in court leaves a gaping void. ... Berlusconi's fall destroys with one
fell blow all the illusions of a section of the population that followed him
like an idol and entrusted him with its dreams and fears. ... The centre-left
party is currently unable to offer an alternative - not even with the help of
the 5 Star protest movement. The broad coalition government which was supposed
to foster reconciliation after a pointless and interminable 'civil war' will
survive a little longer. But it is in a kind of suspended state, lacking any
political operability and the necessary force to deal with difficult situations.
But nonetheless many will cling to it like they would cling to a raft in a
Even after his most recent conviction, an end to Berlusconi's political career
is not in sight, columnist Bert Wagendorp writes in the left-liberal Dutch
daily De Volkskrant: "Berlusconi is fighting tooth and nail against time.
Every young women that he lures into his bed with money must convince him that
he will be young and vital forever. Every vote the electorate gives him
contributes to his feeling of immortality and limitless power. Every look in the
mirror shows him as a shameless all-powerful ruler, the manipulator of his own
reality and others'. In fact he plays this game of immortality and inviolability
so energetically - and convincingly - that I can't imagine we're rid of Silvio
Berlusconi for good. Soon he'll bring down the Letta government, and if he wins
the elections he'll be prime minister once again. Then he'll pass a law
permitting sex with 17-year-olds. Nope, we'll only see the last of Silvio after
his gentle death in the arms of a Lolita."
In the by-elections to replace former minister Jérôme Cahuzac, the former
minister who was exposed as a tax cheat, in the French National Assembly, the
candidate of the conservative UMP won out against his opponent from the
far-right Front National with 53.76 percent against 46.24 percent of the vote.
The fact that the Socialist candidate was out of the race after the first round
of voting illustrates the disappointment of voters on the left, the communist
French daily L'Humanité writes: "When a by-election is caused by a tax fraud
affair surrounding a budget minister, the parliamentary majority faces a serious
handicap. But when such inexcusable mistakes are coupled with popular feelings
that the policies that have been pursued for the past year don't break with
those they rejected when they removed Nicolas Sarkozy from the Elysée Palace, a
large number of voters on the left feel they've been doubly wronged. ... Who can
still doubt that the government will run into a wall if it persists in listening
only to those who want the downfall of the left?"
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