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Wednesday Newspaper Review - Irish Business News and International Stories - - October 22, 2014
By Finfacts Team
Oct 22, 2014 - 8:51 AM
The National Asset Management Agency could finish its asset sales in little more than three years' time if the property market continues to recover.
In its 2015 policy statement, the State bad bank said it was now on course to complete much of its business by the end of 2017 or mid-2018.
As recently as July Nama was forecasting it would have completed most of its work by the end of 2018 but the ongoing improvement in the property market has spurred a shorter deadline.
"Based on its analysis of the residual portfolio and on the assumption that the improved Irish market conditions can be sustained into 2015 and 2016, the board is confident that it will be in a position to redeem in full the senior and subordinated debt and that it may, potentially, be in a position to generate a surplus," Nama said.
"The board's current best estimate is that Nama can expect to complete much of its work by end-2017 or mid-2018," it added.
NEW rules forcing first-time buyers to have big deposits should be phased in gradually, the Central Bank has been told.
This is because a sudden jump from a requirement of a deposit of 10pc to a 20pc one could be very disruptive and unfair to those who are close to getting a 10pc deposit together, consumer advocate Brendan Burgess said in a submission to the Central Bank.
Mr Burgess agrees with the new limits, but says they will make it difficult for potential new buyers to get on the housing ladder. He said the key problem was a shortage of housing.
OTHER countries should follow Ireland's lead in ensuring corporate tax avoidance strategies are shut down, Finance Minister Michael Noonan has said.
But while the minister claimed Ireland's tax strategy was to play fair, the New York Times published a scathing editorial this week criticising the Government for unveiling new measures in the Budget that will allow some companies to cut their tax bills further.
In the Budget, Mr Noonan announced the closure of the 'Double Irish', which allows companies to shift profits to tax havens, in one of the biggest changes to Ireland's corporate tax structure since the 1990s.
But he also announced a scheme to give tax breaks to some companies that derive profits from patents, called the Knowledge Development Box.
The Coalition is considering extending the period during which households will pay an effective fixed rate water charge to allow for the further installation of water meters, and to allow homeowners control their water usage.
Assessed charges – a fixed rate based on the number of occupants per household – currently apply in homes where meters have yet to be installed, but all homes will have their bills capped at the assessed rate until next summer.
While water charges began at the start of this month, all homes, including those with meters installed, will have their bills capped at the assessed rate for nine months.
Irish workers cannot be sure of receiving a State pension in retirement in future generations, according to a report published this morning.
The cost of existing hidden state pension liabilities are estimated by the Pensions Authority to be €440 billion – more than double the €203 billion national debt estimate for the end of this year, a figure that already amounts to 111 per cent of GDP and requires significant reduction under European budgetary rules.
That raises doubts about the sustainability of the State pension promise, the Irish Association of Pension Funds annual benefit conference will hear today.
Permanent TSB, which is 99.2 per cent owned by the State, is expected to announce details of its capital-raising plan on Sunday after the European Central Bank publishes the results of its pan-European comprehensive assessments, which PTSB is expected to fail.
It is not clear how much capital PTSB will be required to raise but the expectation is it will be below €1 billion.
While the ECB will announce the results of the test and the capital shortfall facing PTSB, the Irish bank is likely to reveal the amount it will seek from the markets is considerably less than the deficit identified by the regulator.
The head of the country’s second-largest lender has thrown his weight behind the Central Bank’s proposed mortgage restrictions, saying that he agrees with the principles on which they are based.
AIB chief executive, David Duffy said that the proposals with regard to loan-to-income (LTI) restrictions of 3.5 times a lender’s annual income are “not really that different” from those the bank currently applies, while he also gave his broad support to the loan-to-value (LTV) restrictions the Central Bank has proposed.
Mr Duffy indicated that he felt that the 20% rate is a little higher than he expected, in comparison with other countries, but said that, across the bank’s mortgage portfolio, the average LTV is already below the proposed 80% limit.
Euro Topics: Former Spanish deputy prime minister and IMF chief Rodrigo Rato has voluntarily requested to temporarily suspend his membership of the ruling Popular Party (PP) until the case of the Caja Madrid credit card abuse is resolved.
The move by the man who headed the savings bank and its successor Bankia between 2010 and 2012 had been widely expected following intense pressure from the PP, which is seeking to distance itself from the scandal.
Last week, a court held Rato and his predecessor Miguel Blesa (1996-2010) responsible for the credit card abuse as the former heads of the lenders. Both were told to post bonds of €3 million and €16 million, respectively, to cover civil liabilities in the ongoing investigation into the case.
Don't react to Italy's budget with dogmatism: Brussels should react sensibly rather than dogmatically to the tax cuts and new debts in Italy's budget law, economist Alberto Quadrio Curzio writes in the liberal business daily Il Sole 24 Ore: "Italy is not seeking confrontation with Brussels. All it wants from Europe is a non-dogmatic approach and political and fiscal rationality in the interpretation of the situation. The arguments set forth in the 2015 budget law are convincing. They should be accompanied by the no less important demand for investments in European infrastructure financed by euro bonds. A strategy that ties in with the 300 billion euro investment plan put forward by European Commission [designate] Jean-Claude Juncker, as well as the measures for which [ECB chief] Draghi plans to gradually create more leeway, and which are aimed at creating liquidity for investments."
Swedes fear the Russians once more: For days the Swedish military has been searching for a Russian submarine presumed to be navigating off the coast of Stockholm. The generation of those born since the 1980s is experiencing fears it had never known before, journalist Ronnie Sandahl comments in the left-liberal daily Aftonbladet: "Military service was not our problem - those born after 1991 didn't even have to go in for a physical. ... Have we ever so much as thought about defending our country's borders? In the past 25 years the Cold War has become almost a joke. Weren't submarines [off Sweden's coastline] really just muskrats? Weren't fears of the Russians really just a hobby of the paranoid? ... Now we're waking up to the reality, and some people are already calling for the reintroduction of compulsory military service. Another alternative would be to take up the suggestion made by the Danish populist Mogens Glistrup in the 1980s and replace our country's military personnel and equipment with an answering machine that says 'We surrender!'. In Russian, if possible."
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