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Markets News Afternoon: Lenihan to outline proposals for inquiry into the banking crisis; Report on DCC insider trading says any breaches of company law unintentional
By Finfacts Team
Jan 19, 2010 - 4:40:08 PM
The Minister for Finance Brian Lenihan plans to outline proposals in the Dáil for an inquiry into the banking crisis.
The Cabinet met this morning to discuss the terms of such an inquiry.
The Government is proposing that a Commission of Investigation into the banking crisis should report by the end of this year. The Commission, will be established by the end of June and will have six months to investigate the causes of the systemic failures of Irish banking.
Its work will be preceded by two reports, one by the Governor of the Central Bank on the performance of the financial regulatory system. The second will prepared by a recognised expert or experts, who will conduct a preliminary investigation into the causes of the banking crisis, and the lessons to be learned from it.
These reports are to be delivered by the end of May, and will inform the terms of reference of the Commission of Investigation.
The Government's plans are outlined in an amendment to a Labour Party private members motion due to be debated tonight, which calls for a public inquiry into banking.
Last night Taoiseach Brian Cowen and Green Party leader John Gormley had a meeting in Government Buildings to discuss the issue.
Cowen who was Minister for Finance in the peak years of the property bubble is trying to limit the scope of the inquiry.
Green Party chairman Dan Boyle said on Monday he believed the Government would opt for a “hybrid” inquiry, with both a private and public phase, that would satisfy the demands of the Greens that it be open and public, with meaningful Oireachtas involvement.
DCC/Fyffes insider trading case
A High Court report into DCC, the energy and business services conglomerate, and transactions linked to insider dealing in Fyffes shares, has found that any breaches of company law which occurred "were not made intentionally."
The Director of Corporate Enforcement Paul Appleby said today his office does not plan to take any proceedings arising from the report of the court-appointed inspector who investigated claimed insider dealing by DCC and its former chief executive Jim Flavin in the €106 million sale of the DCC stake in Fyffes 10 years ago.
DCC said today that the Irish High Court has today ordered the publication of the report of its Inspector, Bill Shipsey SC, into specific issues relating to the DCC Group’s shareholding in Fyffes plc between 1995 and 2000.
DCC said it welcomes the findings of the Inspector.
The Inspector noted that “at the root of the application to appoint Inspectors lay a suggestion that DCC and its officers and directors did not take their compliance obligations seriously” and he has now found that “These concerns of the Director of Corporate Enforcement were not borne out in the evidence adduced before me or in the course of my investigations.”
The Inspector concluded “that: the companies took their corporate responsibilities very seriously;
the directors, officers and employees, from the then Chief Executive down, placed a high value on legal and regulatory compliance;
the companies had good and effective corporate governance procedures and controls at board level;
the officers and executive directors of the companies were qualified, competent, and careful individuals;
DCC attracted and retained highly experienced and quality non-executive directors; and
the companies took legal advice when it was appropriate to do so and followed such advice when it was proffered.”
The Irish Stock Exchange in a statement said: "We note from court reports of today’s High Court hearing dealing with the publication of the inspectors report on DCC, that Counsel for the ODCE suggested that the Irish Stock Exchange favoured publication of the inspectors Report 'before 6.30am tomorrow morning.'
For clarification, our advice to the ODCE was that any information adjudged to be price sensitive which was disclosed in open court must be notified to the market as soon as possible.
In terms of the report itself, we have today received a copy of the inspectors report which we will consider over the coming days."
Ulster Bank job cuts
UK government controlled Royal Bank of Scotland (RBS), which owns Ulster Bank, today confirmed that it is to cut 221 jobs on the island of Ireland as part of a major restructuring programme announced last year.
The bank met with 196 technology services staff in its Dublin office and 25 in Belfast earlier today to inform them that they are to be laid off.
RBS said some roles will be transferred to locations where the bank has key back office hubs in the UK and elsewhere.
The bank said it it hopes that the number of compulsory redundancies will be minimal.
In August 2009, Ulster Bank announced plans to cut 250 jobs after making a loss of about £500 million (€585 million) in the first half of the year.
That number was in addition to the 750 job cuts announced in early 2009 with the closure of First Active and its merger with Ulster Bank.
Discussing the costs of the crisis, with Joseph Stiglitz 2001 Nobel Prize winner and Columbia University professor:
UK
UK annual consumer-price inflation surged in December, due to the reversion back to a VAT rate of 17.5%, coupled with comparisons from the previous year of a sharp fall in oil prices and pre-Christmas sales in late 2008.
Inflation spiked to 2.9% in December - - above the Bank of England's 2% target from only 1.9% in November, data from the Office for National Statistics released Tuesday showed.
US
Bloomberg reports that international demand for long-term US stocks, bonds and financial assets rose in November as private investors purchased a record amount of government securities, a Treasury Department report showed.
Net buying of long-term equities, notes and bonds totaled $126.8 billion for the month, compared with net buying of $19.3 billion in October, the Treasury said in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $26.6 billion in November, compared with net selling of $25.4 billion the previous month.
The Dow is up 74 points or 0.74% to 10,684.
The Nasdaq has added 1.04% and the S&P 500 has gained 0.76%.
The ZEW survey of German investor sentiment came in slightly below consensus expectations Tuesday. Matthias Köhler from ZEW told CNBC the German economy is likely to move sideways during the next six months:
In Europe, the Dow Jones Stoxx 600 has added 0.95% Tuesday.
In Dublin, the ISEQ is down 0.24%.
DCC is down 0.10%; Elan is up 1.35% and BoI is down 1.65%.
On the New York Mercantile Exchange, oil for February 2010 delivery is trading at $77.56 down 44 cents from Monday's close. In London, Brent crude for February delivery is trading at $76.17 a barrel.
Currencies
The euro is trading at $1.4285 and at £0.8729.
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.
Following the latest in Haiti, with NBC's Lester Holt:
