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Monday Newspaper Review - Irish Business News and International Stories - - May 20, 2013
By Finfacts Team
May 20, 2013 - 7:04 AM

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Irish Independent:

Homeowners who want to move house but are afraid of losing their low interest tracker mortgages will be offered a lifeline by two major banks. A tracker is a mortgage linked to the currently low rate set by the European Central Bank.

Trackers are so cheap at the moment that the 375,000 homeowners who have them are reluctant to move house because they will lose the valuable mortgage rate.

Now the Irish Independent has learned that Bank of Ireland is to let movers keep their trackers for five years if they move house. And Permanent TSB is close to signing off on a new deal that will see families moving keep their tracker rate for the rest of the loan period.

With both banks, the tracker rate will apply to the outstanding amount of the mortgage. Extra money needed to buy a new property will have to be borrowed at a variable or a fixed rate.

THE wife of bust developer Sean Dunne is planning $154,000 (€120,000) worth of improvements to the basement of her new US mansion, the Irish Independent can reveal.

US planning files show how Gayle Killilea has secured permission to finish the basement of 22 Stillman Lane, with architect's drawings showing a cinema, wine cellar, gym and sauna among other rooms.

Meanwhile, a chain of DIY stores is pursuing $17,000 (€13,200) in allegedly unpaid bills for supplies used in work carried out on the same property in recent months.

The Dunnes are believed to have moved into the house in Greenwich, Connecticut, at the end of March, shortly before Mr Dunne filed for bankruptcy with debts of more than $940m (€730m).

Elan will still have $1.2 billion of cash left to spend if shareholders approve its first package of acquisitions announced this morning, chief executive Kelly Martin said.

Elan agreed today to buy Austrian rare drug specialist AOP Orphan for €263.5m and pay $40 million for a 48pc stake in Dubai-based sales and marketing firm Newbridge pharmaceuticals.

That followed a $1 billion royalties deal just a week ago as the Irish company looks to fend off a takeover bid from US investment firm Royalty Pharma and reshape its business following a multi-billion dollar drug sale in February.

"This isn't the end of the journey, it's the middle phase... We will have north of $1 billion remaining on our balance sheet for additional investments in the next 6-12 months," Martin said, describing the Royalty bid as "a bit of nuisance".

Marks & Spencer has become the latest company to be embroiled in the UK controversy over tax practices following reports it uses an Irish subsidiary to bill European sales.

In a structure used only for overseas sales, the company’s UK warehouses sell goods to Marks & Spencer (Ireland) Ltd at wholesale prices, according to reports. The retailer dispatches online orders destined for mainland Europe from the UK but bills the transaction to Ireland, according to documents seen by the Guardian.

Irish Times

Talks on a revised public sector pay agreement at the Labour Relations Commission later today amid fresh doubts over the Government’s savings target.

Minister of State Brian Hayes has given the Government’s first public indication that it may not generate €300 million in savings on the public service pay and pensions bill this year under talks on a revision to the Croke Park II deal.  He said yesterday that the key issue for the Government would be to secure €1 billion in savings by 2015.

He said the €300 million target was still an ambition. However, some trade unions had advanced alternative proposals and he said these may not deliver the full level of savings for this year, but could produce them by 2014 or 2015.

Reports yesterday suggested that the Government may save €250 million this year. However, other sources indicated the figure could be closer to €200 million.

The taxpayer could be forgiven for being a little bemused at claims that jobs are at risk because of heavy-handed regulation of the banks.

Many of them will have just completed the paperwork involved in paying their property tax. It is the latest instalment in a five-year fiscal plan aimed at restoring the country’s solvency. Runaway lending by poorly regulated banks was a very significant contributory factor in our national bankruptcy. The bill for bailing them out currently stands somewhere north of €60 billion and unemployment is stuck above 14 per cent for reasons that are not unrelated.

Irish pensioners should consider the young before protesting over cuts to their retirement income or asking for further benefits, pension reformer Nick Sherry has said.

The former politician who ran Australia’s pension system said the younger generation was already weighed down with debt, and was bearing the brunt of the economic crisis, an effect being compounded by high emigration.

“People close to retirement who argue for greater benefits should remember there are fewer young people around to pay for them and they are putting a greater burden on them. It’s their kids and grandkids who will have to pay for the benefits or increased payments.

“There are so many young people emigrating from Ireland so there are fewer people around to pay when old people ask for more benefits.”

European pension plans continue to shift out of equities, despite rising equity markets across the globe during 2012 and 2013. However, Irish pension schemes are not following the trend, with allocation to equities steady at 44 per cent over the past 12 months, according to a new asset allocation survey from pensions consultant Mercer.

For Paul Kenny, senior investment consultant with Mercer, a combination of factors, such as a challenging and uncertain regulatory background and the challenge of generating positive returns, has meant that some Irish pension schemes have paused their “risk reducing journeys” over 2012. However, he warned that the risks of static high equity allocations for defined benefit pension schemes are “well understood” and long-term de-risking and diversification out of equities remain important objectives.

Irish Examiner

Ireland will be able to maintain its current corporation tax code in the face of international pressure to prevent multinational corporations avoid paying their fare share of tax, Minister for Jobs, Enterprise and Innovation, Richard Bruton said yesterday.

Mr Bruton said Ireland has a transparent low rate that does not have a lot of special deals within it. His comments came days after British parliamentarians castigated Google for paying just £6m (€7.1m) in corporation tax in 2011 despite generating more than £3bn (€3.6bn) a year in revenues in the UK.

The eurozone is heading towards a break up unless there are moves towards much closer political and fiscal union, according to chief economist with State Street Global Advisers, Chris Probyn.

There were fears throughout most of 2011 and into 2012 that the single currency would unravel amid unbearable strains between the member states.

But the much more interventionist ECB under president Mario Draghi has calmed market fears, particularly in a speech last July when he said, “he would do whatever it takes to save the euro”. At the beginning of last September the ECB announced the Outright Monetary Transaction (OMT) programme that promised unlimited purchases of the short term debt of distressed member states in return for signing up to economic reforms.

From an economic perspective, the most positive outcome of the treaty negotiations (ratified in 1922) was that the Irish Free State acquired full fiscal autonomy from the UK thereafter.

But our new study of Irish economic history since independence has revealed that the economy performed very poorly in the inter war years relative to the British and European economies, despite vigorous attempts to encourage growth, initially through improving agricultural exports in the 1920s and subsequently through import substitution and protectionism.

The German Frankfurter Allgemeine Zeitung complained on Friday: "The base interest rate has been at a historic low of 0.5 percent since the beginning of May. This means an aggressive redistribution of wealth and income, the conservative daily Frankfurter Allgemeine Zeitung angrily comments: "Thanks to the ECB, savers are getting a yield of just half a percent. But even that is being eaten away by inflation, and on top of everything else rising prices are nibbling away at capital. ... The politicians and central banks are perfectly willing to accept this cold-blooded expropriation of the savers and life insurance policy holders because they want to help over-indebted states through the zero-interest policy. So while those who are putting away money to make provisions for their old age are forced to watch their promised pensions melt away like snow in the sun, debtor states are happily taking out new loans because the money is so cheap. ... In future the ECB will make sure that in the Eurozone money is redistributed from the creditors to the debtors."

Lidové noviny of the Czech Republic said: With his package of measures President Hollande is maneuvering himself into a corner, the conservative daily Lidové noviny writes: "With the exception of the elites in France and Southern Europe, no one shares Hollande's ideas. Most of these, particularly on the subject of euro bonds, stand in direct contrast to Germany's interests. This isn't about European ideals, but about a fierce political battle over whether Europe will be more German or more French. For the French this is dangerous, even if they manage to push through their ideas. Once they pushed for the introduction of the euro in return for Germany's reunification, in the hopes of curbing Berlin's economic strength. However the exact opposite was the result."

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