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News : Irish Last Updated: Nov 28, 2012 - 9:05 AM

Wednesday Newspaper Review - Irish Business News and International Stories - - November 28, 2012
By Finfacts Team
Nov 28, 2012 - 9:00 AM

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The Irish Independent reports that Ireland does not expect to benefit from the deal to reduce Greek debt but remains determined to find a mechanism to avoid paying €3bn due in four months for bailing out Anglo Irish Bank, Taoiseach Enda Kenny said yesterday.

"It is the intention of the Minister for Finance, on behalf of the Government, not to have to pay the €3bn that is due in March 2013," Mr Kenny told the Dail. The Government is looking for concessions in a "different area" to Greece, he added.

His comments came after European finance ministers agreed to cut the rates on Greece's bailout loans and suspend interest payments for a decade to give Greece more time to repay the money it owes.

The deal paves the way for the release of urgently needed aid loans.

The deal, clinched at the third attempt after weeks of wrangling, removes the biggest risk of a sovereign default in the eurozone for now, ensuring the near-bankrupt country will stay afloat at least until after a 2013 German general election.

Earlier, Portuguese Finance Minister Vitor Gaspar said in Lisbon that Ireland and Portugal both stand to benefit from the deal.

"Portugal and Ireland, which are programme countries, will benefit through the conditions opened in the framework of the European Financial Stability Mechanism," Mr Gaspar said.

The suggestion was rejected by the Department of Finance.

"Last night was about Greece, not Ireland and there was no discussion on extending the conditions or concessions agreed for Greece to Ireland," a spokesman said.

Private sector economists in Dublin welcomed the Greek deal with one calculating that it could shave billons off the national debt if the same terms were extended to Ireland.

"There are some important precedents set for Ireland and Portugal if their programmes look like falling short in the coming years," said Goodbody Stockbrokers economist Dermot O'Leary while Davy stockbrokers economist Conall MacCoille said the deal "must surely strengthen Ireland's hand in negotiations with the EU".


Owen Callan, an analyst at Danske Bank in Dublin, calculated that an Irish deal similar to the Greek one would shave €12.5b off total Irish deficits over the next decade. That would be equivalent to 8pc of gross domestic product.

Separately, the Organisation for Economic Co-operation and Development said a deal to reduce Ireland national debt would "ease the burden".

The comments came in the Paris-based think-tank's semi-annual report on the Irish and global economies.

The OECD forecasts the local economy will expand 1.3pc next year and 2.2pc the following year after growing 0.5pc this year.

Unemployment will remain at the current high levels.

"While marked progress has been made in resolving the financial and banking crises, economic growth is projected to remain low, but positive, during the next two years," the OECD said in a chapter on Ireland.

The Government should be allowed some wiggle room if economic growth was slower, it added.

The OECD sees the eurozone economy contracting next year and again in 2014 and warned that the debt crisis in the single currency zone was the greatest threat to the world economy. It slashed its global growth forecasts, warning that the debt crisis in the recession-hit eurozone was the greatest threat to the world economy.

It also urged central banks to prepare for more exceptional monetary easing if politicians failed to come up with credible answers to the debt crisis.

The Irish Independent also reports that solicitor and property investor Brian O'Donnell is expected to take to the witness stand today in a London courtroom where his bid to declare bankruptcy in Britain has been challenged by Bank of Ireland.

Lawyers for both sides yesterday engaged in legal argument in the High Court battle which surrounds where Mr O'Donnell and his wife Mary Pat's centre of main interest (COMI) is.

The O'Donnells contend that it is in the UK but the bank says it is in Dublin, leading to the accusation that the couple are 'bankruptcy tourists' seeking to avail of the UK's more lenient bankruptcy laws.

Gabriel Moss, counsel for the bank, said he expected to cross-examine Mr O'Donnell in the witness box for up to four or five days.

He said the solicitor, who was once one of Ireland's leading commercial lawyers, was very experienced and not capable of a yes or no answer.

Paul Burton, representing Mr O'Donnell, said he was "amazed" that the cross-examination would take this long and that the bank had "over-complicated" the matter.

Legal argument

There was further legal argument over another witness statement provided by Mr O'Donnell and the attendance of Ms O'Donnell to give evidence at the case.

The judge adjourned the case until today when Mr O'Donnell is due to start giving evidence this afternoon.

Under Irish law, bankruptcy can take up to 12 years to be completed while in the UK it can take as little as 12 months.

This has led to a number of high-profile Irish businesspeople, who have suffered as a result of recession, to declare bankruptcy in Britain.

The O'Donnells once commanded a property empire which included some €1bn worth of assets in London, Washington and Stockholm amongst others through their company Vico Capital.

Mr O'Donnell has listed a property on Barton Street in Westminster – a short walk from the houses of parliament – as his home and has included a range of receipts, tickets, dry-cleaning bills and a TV licence renewal as part of a file to prove the city as his centre of main interest.

Bank of Ireland has secured a judgment from the High Court in Dublin against them for €71.5m.

Last month, the couple and their two adult sons lost a bid to stop the High Court dealing with the bank's case alleging fraud against them.

The bank brought an action against them alleging they conspired to put in place a "blatant" scheme to put property assets in London beyond its reach. The couple deny the claims.

The Irish Times reports that the Government is poised to announce within the next few days that it is splitting Shannon airport from the Dublin Airport Authority (DAA).

Ministers Leo Varadkar and Richard Bruton have been working since May on a plan to combine the airport with State body Shannon Development’s industrial land bank and separate it from the Dublin authority.

In the Dáil yesterday Mr Varadkar, the Minister for Transport, said that the Cabinet had discussed a memo on the proposals, and that he would be making an announcement in the very near future.

A spokesman for his department confirmed that this was likely to be in the next few days.The split has been widely anticipated.

It emerged recently that the Government was due to decide on the plan by the end of this month, and that Shannon airport would be split from the DAA, which has been responsible for the airport since 2004, by the end of the year.

Mr Varadkar told the Dáil that once it was separated Shannon would be able to set its own charges, which he said should assist in getting new business.

The DAA’s overseas duty-free arm, Aer Rianta International, which made €35 million profits last year, will remain with the authority, the Minister said.

He pointed out that the duty-free company’s plans mean it would have to spend €60 million in the next couple of years.

“It can only do that, it can only do its business when it has the big balance sheet of the DAA to borrow against,” he said.

Shannon Airport will have its debt to the DAA written off.

Mr Varadkar pointed that if the airport authority was also to lose Aer Rianta International then that could threaten its viability.

The Irish Times also reports that an Irish online betting company backed by high-profile Wall Street hedge fund owners is facing court action and possible fines in the US for breaches of commodity trading regulations.

Dublin-based Intrade, which allows customers to wager on commodity prices, stock market indices and world events, has closed its website to US clients citing “legal and regulatory” pressures.

US regulator the Commodity Futures Trading Commission has filed a series of civil complaints against Intrade and its parent, Trading Exchange, in the federal courts, claiming that they unlawfully allowed US customers to “buy and sell” options predicting that gold prices or currency values would reach a certain level on a given date.

The complaint also alleges that the Irish companies knowingly filed false forms with the commission claiming that Intrade limited its activities to only to eligible market participants.

“Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail US customers to buy and sell off-exchange options on the website,”

A number of US hedge funds and their owners hold shares in Trading Exchange Network, including Stanley Druckenmiller of Duquesne Capital Management and Paul Tudor Jones of Tudor Investments.

When he worked with George Soros’s Quantum Fund in 1992, Mr Druckenmiller masterminded the wholesale short-selling of sterling that eventually forced the British government to take its currency out of the European Exchange Rate Mechanism, the euro’s forerunner.

The fund was reported to have made more than $1 billion profit from its sterling trades in just a few days in early 1992. It effectively broke the Bank of England, which did not have the reserves to prop up the currency.

Mr Druckenmiller is reckoned to be worth $2.5 billion and has given an estimated $700 million to charities.

Mr Tudor Jones turned down a place at Harvard Business School to set up his own hedge fund in 1980. He famously predicted the 1987 “black Monday” crash, tripling his fund’s investments through short selling. Forbes Magazine has estimated his fortune at $3.4 billion.

The Irish Examiner reports that Nama has spent €51.5m on legal fees since it was set up but expects to recoup €36.16m of this from property developers.

In a response to a parliamentary question by Sinn Féin’s Gerry Adams, Finance Minister Michael Noonan laid out the legal costs incurred by Nama and the firms to whom they were paid. This year alone Nama has incurred costs of nearly €8.5m up to Jun 30 that the bank expects to be able to recoup from developers, a huge number of whom are bankrupt.

Mr Noonan said that where a developer is unable to repay the agency, their legal costs the bill will be added to a developers’ loans.

"Borrower recoverable costs are principally legal fees which Nama has incurred on behalf of Nama borrowers which are recoverable from those borrowers. Where the borrower is in a position to repay such costs Nama will seek repayment in cash. To the extent the borrower is not in a position to repay those costs, Nama will add these costs to the borrower’s debt obligations to Nama."

Nama expects to recover €600,000 it has spent on due diligence so far this year and a further €7.8m inlegal fees that the agency has taken on behalf of its borrowers. Over the life of the agency it has spent a further €14.2m on due diligence and €12.7m on legal fees.

The biggest legal earner in 2012 was A&L Goodbody which earned just shy of €1m on behalf of Nama borrowers. William Fry made about €570,000 representing Nama borrowers in court, while Eversheds O’Donnell Sweeney earned €515,000.

Foreign news reviews and more comprehensive coverage of Irish news is available in our Daily News Digest in the Global category on Finfacts Premium.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

© Copyright 2011 by Finfacts.com

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