The Irish Independent reports that the Government is edging towards accepting a multibillion
euro bailout for the banks following intense pressure from
the European Union to sort out our finances.
To fend off being forced into a bailout for the entire
State, Finance Minister Brian Lenihan is poised to agree to
a bank injection to stabilise the euro and calm markets.
Following pressure from the European Central Bank (ECB),
Taoiseach Brian Cowen last night indicated the Government
would accept a huge injection of cash for the banks only.
Mr Lenihan will approach today’s crucial meeting of EU
finance ministers seeking to avoid being forced into a
public finance bailout – which would carry tough conditions
– but is willing to accept money for the banks.
The Government will portray its acceptance of funds as an
effort to stabilise the euro. But there are concerns about
the implications and terms attached to accepting a bank
bailout, according to a source familiar with the process.
It follows disclosure that the Irish Central bank had
pumped €20bn of funding into the banks in recent months.
The ECB is hoping the cash injection will stabilise
markets, take pressure off the eurozone and give the banks a
better footing in which to operate so they can lessen their
dependence on ECB loans.
European Central Bank Vice President Vitor Constancio
said yesterday that Ireland would be able to tap the fund to
save its banks.
Fellow central bank council member Miguel Angel Fernandez
Ordonez said the nation should make a “final decision” on an
The proposed bailout of the banks could lead to the
complete nationalisation of the country’s two largest banks.
AIB is already facing 90pc state control, while it would
take only €600m of fresh capital to put Bank of Ireland into
majority state ownership. Irish Life and Permanent would
also be majority owned, with only modest additional cash
injections from the State.
Although the Government still insists it is not applying
for funding, Mr Cowen appeared to accept a deal would have
to be struck as he said Ireland would see “in what way can
we bring stability into the markets”.
Mr Cowen’s comments came after a day of intense
behind the- scenes activity in Dublin and Brussels.
Concerned depositors were reassured that their money in
the banks was safe. But the ECB said Irish banks were facing
further losses, as it said “clear” decisions were needed
soon to prevent the crisis from affecting other countries.
German Chancellor Angela Merkel raised the spectre of the
euro collapsing as she warned: “If the euro fails, then
Europe fails.” Today Mr Lenihan will face a grilling from
his fellow finance ministers in Brussels.
He will find himself attempting to avoid being forced
into a wholesale bailout for the country. Senior sources at
Irish banks last night said they had “no idea” what kind of
support any bailout could take since they had not been asked
for their views.
Banks that could find themselves in majority state
ownership as a result of any fresh bailout could take a
legal challenge against the move.
“It’s hard for me to say if I’m going to challenge
something I don’t know about yet,” a senior banker said last
night. The Government is also planning to publish its
four-year budgetary plan early next week – but Budget day
looks likely to remain December 7.
The possibility of bringing forward the Budget by a week
to boost investor confidence is also under consideration.
But a coalition source said November’s taxation and
spending figures would be required for the Budget, meaning
Thursday, December 2, would be the earliest possible date.
Economic experts in Germany say their government “wants
to end the market turmoil, which has been bad for the
markets and also for Chancellor Merkel’s domestic image”.
Political economist Henrik Enderlein said the Germans now
realised they made a huge mistake talking about bondholders
taking a hit when countries cannot pay their debts.
Chancellor Merkel’s bid to penalise bondholders for
betting against fiscally unsound governments prompted
objections from ECB president Jean- Claude Trichet and
Luxembourg Prime Minister Jean-Claude Juncker, who chairs
today’s meeting in Brussels.
But Mr Juncker said he did not expect an agreement with
Ireland at today’s meeting.
The Irish Independent also reports that the private equity consortium fighting it out for ownership
of EBS is offering the Government a profit-sharing deal so
the State can enjoy some upside from the embattled building
Sources close to the Cardinal Capital-led consortium last
night confirmed that the group was also "open to" allowing
the State to keep a stake in EBS, mirroring an offer made by
Irish Life & Permanent (IL&P).
The Cardinal grouping, which also includes famed US
investor Wilbur Ross and US private equity house Carlyle,
and IL&P are the last remaining bidders for EBS and have
been given until December 22 to lodge final bids.
The National Treasury Management Agency (Ntma) is
understood to have held numerous meetings with both groups
in recent weeks to tease out the finer points of their bids,
while due diligence by both bidders is ongoing.
Meetings with the European Commission, which is examining
the €350m in state aid already given to EBS, have been
scheduled for late November.
"There's no question that the Government is selling too
cheap," a source close to Dublin-based Cardinal said
yesterday, pointing out that the State was now on the hook
for providing EBS with another €525m of capital by the end
of the year.
The Cardinal bid sees the new consortium pick up that
tab, and also repay the €350m the Government has already
ploughed in once the building society becomes sufficiently
"There's an element of profit sharing as well," a source
confirmed yesterday, "once we see clear blue sky, everyone
gets a piece of that."
The detail of Cardinal's plan is understood to include no
job cuts, since the consortium wants to use EBS as a
building block to create a larger Irish institution.
Cardinal has already contacted the Ntma about buying the
deposit book of Irish Nationwide, sources confirmed, while
other Irish assets are also being assessed.
While Cardinal is promoting its bid as a way to bring
foreign capital into the market, the consortium's offer is
best-known for its commentary around debt forgiveness for
Sources yesterday said that those original comments by Mr
Ross had been overplayed, pointing to a weekend interview
from the American which stressed that any debt forgiveness
would be limited and on a case-by-case basis.
"Debt forgiveness is not a major plank of the offer," one
Cardinal's initial offer for EBS was lodged before the
sovereign debt crisis which has locked Ireland's
institutions out of the funding market and raised the
spectre of an international bailout.
Sources yesterday said that all of Cardinal's backers
remained fully committed despite the changing circumstances.
Cardinal believes a "system-wide" solution to the funding
crisis is needed but thinks EBS will be in better shape than
the other institutions if it has the firepower of investors
like Mr Ross on its board.
Cardinal would also have no hesitation in going ahead
with its bid in the event that Ireland is forced to accept a
bailout, since such a bailout could be seen as "solving"
some of the current market issues.
Sources close to the consortium also confirmed that
Cardinal has no plans to change any of EBS's executive team.
"For an institution of its size, the depth of experience
there is impressive," said one source.
The Irish Times reports that Ireland not making an application for EU or IMF funding for the
State, according to Taoiseach Brian Cowen. He said last night an
application was not being made because the country was already
funded right up to the middle of next year.
Mr Cowen accepted
that the cost of money for Ireland on the bond markets was high
but the issue would be discussed by Brian Lenihan and the other
EU finance ministers at their meeting in Brussels today.
“I have a job to do which is to ensure we do the right thing
by the country,” said Mr Cowen, who added that Ireland would sit
down with its EU partners and discuss “how we underpin banking
and financial stability in the medium and long term.”
The Taoiseach said that if the current turbulent market
conditions were to become the norm they would cause a lot of
problems for people in a number of countries where budget
deficits had to be reduced and funds provided for state
“In a context where there is a lot of turbulence and worry
and concern, I am just making the point that we will calmly and
in a considered way deal with these issues in the days and weeks
and months ahead,” the Taoiseach said in an interview on RTÉ
Although the European authorities in Brussels sought to play
down expectations that the Government would soon apply for aid
under the EU/IMF rescue scheme, public remarks from the top
level of the European Central Bank (ECB) indicated that a move
to bolster Ireland’s banks is under discussion. Talks seeking a
common position on how this could be done will continue today
ahead of the finance ministers’ meeting, with Department of
Finance sources saying last night it was too early to predict
In Vienna yesterday, ECB vice-president Vitor Constancio said
the Government would be able to use the emergency fund for euro
governments to recapitalise banks. However, senior Dublin
sources played down the prospect of any early step in that
Mr Constancio said: The Irish state is financed until part of
next year, but it is also a problem of the banks that are at the
centre of the problems in Ireland and considerations have to be
He said the problems of the Irish banking sector “are not
only problems of liquidity but also in some cases problems of
capital”. Even though the EU rescue fund can’t lend directly to
banks, he said Dublin can “use the money for that purpose”.
The yield on Irish Government debt – the price charged by the
markets to lend to Ireland – will also be watched ahead of the
meeting. Irish yields fell yesterday, indicative of greater
market confidence in Ireland.
After relative calm on the markets yesterday, informed
sources said EU leaders were working on the basis that Ireland
should be given every opportunity to proceed with the four-year
plan and the budget.
They said, however, that the situation remained volatile
given the risk that market tension might again erupt.
Euro group chief Jean-Claude Juncker tried to damp down
pressure on the Government ahead of the finance ministers’
meeting tonight, saying the Irish authorities were ‘‘not near
the point where they would ask for external help”. The
commission dismissed reports of bailout talks as an
“exaggeration” and the spokesman for economics commissioner Olli Rehn declined to discuss the questions that might be raised in
any intervention to assist the banks.
‘‘The presentation of this four-year plan . . . can only
reinforce that confidence in the Irish economy and on the fiscal
sustainability,” he said.
With Ireland’s difficult position the main talking point in
Brussels, well-placed sources acknowledged that some around the
commission table have doubts about the capacity of the Irish
State to assume on its own the entire burden of the banking
Sources acknowledged that certain high-level commission
officials have doubts about the growth forecasts in the 2011
budget and the early years of the four-year plan. The sources
emphasised, however, that this was not the position of the
commission itself or the principal figures involved in
discussions on Ireland.
Responding to the Taoiseach last night Fine Gael Finance
spokesman Michael Noonan said Mr Cowen needed “to speak plainly
and not speak in riddles.” Mr Noonan said that it would be
better if a bailout could be avoided. “Certainly we think it’s a
much better national position to control our own affairs. Our
sovereignty was got at a price. We should not give it away
The Irish Times also reports that spending on online advertising in Ireland rose by more than 12
per cent in the first half of 2010 to almost €54 million, driven
by a rise in the number of internet users.
According to the
latest study from the IAB Ireland, the trade association for the
Irish online advertising industry, and PricewaterhouseCoopers
(PwC), all online advertising formats attracted higher levels of
advertising spending in the half-year to the end of June.
Paid-search advertising was one of the strongest performers,
accounting for 45 per cent of total online expenditure in the
first half of 2010, while 26 per cent was spent on online
“The double-digit growth in Irish online ad spend is a
recognition by advertisers of the impressive return on
investment delivered by online advertising formats,” said
Suzanne McElligott, chief executive of IAB Ireland.
“Our market is now really embracing the digital opportunity,”
The study found that the pick-up in online advertising was
fuelled by a rise in the number of household broadband
connections this year and an increase in internet usage,
including a dramatic growth in social media usage.
Some 68 per cent of participants in the study said that they
anticipate “growth”, or “strong growth”, in advertising spending
in the next six months.
A total of 29 publishers participated in the study, many of
whom represent multiple websites.
Other participants include sales houses and advertising
A previous IAB/PwC study found that Ireland’s online
advertising market was worth almost €100 million last year – 10
per cent of the overall advertising spend.
At €97.2 million, 2009 spending on online advertising
overtook expenditure on outdoor, magazine and cinema
The Irish Examiner reports that seriously injured people awarded damages in court should
be allowed to receive the money periodically throughout their lives
instead of in one lump sum, a top level report has advised.
An expert working group chaired by High Court Judge Mr Justice John
Quirke yesterday published its report into the system of payments made
to people in cases involving medical negligence, claiming the current
lump sum model made it "inescapable" that wrong amounts will be awarded.
A submission to the group said the system of lump sum awards attracted
"money hungry wolves", sometimes family members or friends.
The group has now submitted a proposed draft bill to the Minister for
Justice after it declared the system "inadequate and inappropriate",
mainly due to uncertainties over the plaintiff’s future circumstances
and investment returns and inflation rates.
"The one virtual certainty about a lump sum award to pay for future care
is that the wrong amount will be awarded," it said. "That is
Given that cases involved "a conflict of evidence with both parties
seeking the best possible outcome", the report argued that courts face
"the almost impossible task of providing ‘fair and just compensation’
where life expectancy is uncertain or disputed".
According to the report, the expert group found seriously injured
plaintiffs should not be deprived of a right to claim damages, intended
to pay for the cost of their future care, periodically.
In addition, the group said these changes would not interfere with the
rights of capacitated adults to reach agreement and to settle claims for
damages "in such manner as they may deem appropriate".
Recommendations include that new laws be enacted to allow the courts to
order consensual and non-consensual periodic payments where long-term
permanent care is needed – taking into account the nature of the
injuries and the circumstances of the person awarded the damages. These
payments would be exempt from taxation or for use in paying off
creditors in the event of bankruptcy.
The report argues that the courts should also be allowed to order
periodic payments for loss of earnings, but only by agreement between
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