| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : International Last Updated: Nov 16, 2010 - 8:29:58 AM


Tuesday Newspaper Review - Irish Business News and International Stories - - November 16, 2010
By Finfacts Team
Nov 16, 2010 - 7:46:03 AM

Email this article
 Printer friendly page

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 aid plan.

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.

Spending

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 society's recovery.

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 profitable.

"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."

Detail

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 mortgage-holders.

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 source insisted.

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 services.

“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 television.

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 the outcome.

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 direction.

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 pondered.

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 bailout.

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 lightly.”

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 classified advertising.

“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,” she said.

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 networks.

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 advertising.

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 inescapable."

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 the parties.

* www.justice.ie

Besides a paid subscription, the Financial Times provides the following options:

Free Registered User

See up to 10 articles a month, access email services and portfolio tools

Occasional Reader

Read 1 article a month

Editor's Picks:

Eurozone members pressed on debt plans - - Finance ministers turn spotlight on Ireland and Portugal; Ireland, at the centre of the renewed crisis because of its banking woes, is considered by many investors to be almost certain to need financial support, with Portugal to follow.

Europe must heed Ireland’s lesson -- Pressure risks amplifying Dublin’s previous mistakes; The FT says in an editorial that EFSF support will do no good, however, unless Dublin tackles the source of doubt about its solvency: the government’s vow to back the senior debt of banks, cost what it may for the taxpayer.

Facebook expands into e-mail - - Social networking site takes on role of portal; Facebook thinks it can offer more personal and relevant messages as a social network, where communications can be easily filtered down to friends and friends of friends.

Sebastian Mallaby: Currency warriors should consider India -- India manages its economy as the textbooks say a developing country ought to. It runs a trade deficit, thereby contributing to the rich world’s recovery; and it imports capital to help lift its people out of poverty, registering growth of 8 per cent or so a year.

Greece pledges to hit deficit reduction goal - - Papandreou says German stance may cause sovereign defaults; George Papandreou, the Greek premier, said Germany’s insistence on a future mechanism for banks and bond markets to share the pain of any eurozone sovereign debt default from 2013 could break some EU economies.

China hits rocky road over diesel demand - - Power shortages are reverberating through the global oil market as traders cash in, with some holding on to their stocks and waiting for Beijing to increase official prices; The IEA estimates the surge in diesel demand will add about 70,000 barrels a day to the country’s oil consumption from October to February – equal to about 8.5 per cent of the country’s total oil demand growth forecast of 818,000 b/d in 2010.

Cameron insists Britain still great power - - Dispute over whether UK now ‘a spectator’; “Everyone else has come to Korea for a summit or a business meeting. I’ve come just for a good night’s sleep,” he joked to business leaders in Seoul, a reference to his new-born baby.
 

Access to the New York Times is currently free. If you are not registered, click here

Editor's Picks:

Europe Fears That Debt Crisis Is Ready to Spread -- European officials are concerned that a crisis like the one that hit Greece this year could spread to Ireland and Portugal; Despite the insistence of Irish officials that only its banks need additional help, investors continue to bet on an Irish rescue, driving down the bond yields on that country’s debt against a benchmark again on Monday.

How to Kill the Meth Monster -- The surest way to stop the manufacture of methamphetamine is to require a prescription for its essential ingredient, pseudoephedrine; In 1976, the Food and Drug Administration allowed it to be sold over the counter, inadvertently letting the genie out of the bottle. Afterward, the meth epidemic spread across the nation, leaving destroyed lives and families in its wake.

The Two Cultures - - David Brooks says we seem to be entering an age in which statecraft is, once again, an art, not a science. Just look at the countries that have weathered the recession the best; Ethan Ilzetzki of the London School of Economics and Enrique G. Mendoza and Carlos A. Vegh of the University of Maryland examined stimulus efforts in 44 countries. They argued that fiscal stimulus can be quite effective in low-debt countries with fixed exchange rates and closed economies.

G.M. Rising: Who Should Get the Credit? - -  The turnaround of General Motors should become a case study for when and why the private equity and restructuring business can work. But the author Malcolm Gladwell offers a contrarian argument; Gladwell hates private equity and he says G.M.’s newfound success is a result of a man long forgotten: Rick Wagoner, G.M.’s former chief executive.

Voices of Foreclosure Speak Daily About Desperation and Misery - - In California’s Simi Valley, 4,000 employees of Bank of America handle 50,000 calls a day about mortgages and homes in peril; On the wall of Ms. Seymore’s cubicle is a placard warning Bank of America representatives to transfer callers from people like members of Congress, officials from regulatory agencies, attorneys general offices and the news media “to your team or unit manager ... no exceptions.”

Kremlin Says New Evidence Ties Lawyer Who Died in Jail to Theft of $230 Million -- Policee officials, fighting accusations that they framed Sergei L. Magnitsky and allowed him to die, disclosed what they said was new evidence of his guilt; “Sergei Magnitsky reported a crime committed by police officers,” Hedge fund manager William Browder who was expelled from Russia said. “They then arrested him, tortured him and killed him. Now, one year later, they are accusing him of the crime that they committed. There is a special place in hell for people like this.”


© Copyright 2010 by Finfacts.com

Top of Page

International
Latest Headlines
Wednesday newspaper review: December 17, 2014
Tuesday newspaper review: December 16, 2014
Monday Newspaper Review - Irish Business News and International Stories - - December 08, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 28, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 27, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 25, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 21, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 20, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - November 19, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 18, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 17, 2014
Friday Newspaper Review - Irish Business News and International Stories - - November 14, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 13, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - November 12, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 11, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 10, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - November 06, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - November 04, 2014
Monday Newspaper Review - Irish Business News and International Stories - - November 03, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 31, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 30, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 29, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 28, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 24, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 22, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 21, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 20, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 17, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 16, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 15, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 13, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 10, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 09, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 08, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 07, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 06, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 02, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 01, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 29, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 26, 2014