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News : Irish Last Updated: Feb 4, 2013 - 9:30 AM


Monday Newspaper Review - Irish Business News and International Stories - - February 04, 2013
By Finfacts Team
Feb 4, 2013 - 8:43 AM

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The Irish Independent reports that thousands of motorists face higher premiums this year as insurance companies are given permission to access the penalty points database.

This is because, for the first time, insurers will be able to call up a person's driving history and see a driver's record – including exactly what type of penalty-point offences they have committed.

It means that companies can penalise drivers who have racked up points for the 18 most serious offences including speeding, drink driving, driving with no insurance and using a mobile phone.

Motorists who lie about the number of points they have – and the reasons for getting them – will have their policies invalidated.

And conversely, motorists with no points should enjoy lower premiums.

The sweeping new powers come after Transport Minister Leo Varadkar signed new regulations, which will allow companies to probe a driver's history.

The new laws give access to the National Vehicle Driver File (NVDF), a confidential database where penalty points are recorded, and which details the reason for points being applied.

Certain penalty-point offences will be weighted to incur a higher premium, with 18 listed in the regulations, including drink driving and careless driving.

Insurers are expected to load premiums for risky drivers. Current loadings for drink driving are as high as 150pc of the cost of the insurance.

"This is about road safety, and rewarding safe motorists ," Mr Varadkar said.

"By providing details of points incurred for serious offences, it has the potential to lead to lower insurance premiums for safer drivers."

The deal comes after more than a year of negotiations between the Government, insurance companies and Data Protection Commissioner.

All insurance companies will have access to the NVDF, and most of the cost of installing the system that allows access was funded by the industry.

The insurance companies will be under pressure to pass on any savings to drivers who have no points on their licence – but it is unclear if this will happen until the new system is rolled out over the coming months.

The information will not be available to the general public and is subject to strict data protection controls. It can only be used when premiums are being renewed, or underwriters look for information to assess risk.

A spokesman for the Irish Insurance Federation (IIF), which includes most motor insurers, said the system would help improve road safety and that people with no points would benefit.

"It is a good news story because people with no points will benefit while dangerous drivers will pay more," he said.

"We will ask for the driver (licence) number and surname and that will be pinged through a computer down to the Department of Transport. It will verify the number of points, and it will give us details on risk-related offences.

The Irish Independent also reports that the ESB managed to slash its pension deficit by about €1.89bn in just four years.

The commercial semi-state had a €1.96bn black hole in its contributory scheme in 2008, but that was reduced to €72m by the end of 2011.

Given the sheer scale of the deficit, the company has been trying to plug the hole in recent years by closing it to new members and freezing pay and benefits.

The contributory scheme was similar to a public service pension and was funded from contributions from members and the company.

Management at the semi-state and unions have struck a deal where deductions were reduced with the roll-out of Career Average Revalued Earnings (CARE) from January last year, a pension and pay freeze until 2014 and 2012 respectively and the capping of any future increases in pensions at 4pc.

All future increases in pensions paid will also be dependent on the solvency of the ESB scheme.

The Pensions Board approved a funding proposal in October, submitted by the trustees of the ESB scheme, changing the scheme from a defined benefit to a defined contribution.

"The change in accounting treatment gave rise to a once-off exceptional charge in the financial year ended December 31, 2010, of €330m," the investor document said.

The company warned in 2009 that the scheme would have to be radically overhauled and that remedial action would be needed to address the deficit.

It blamed the recession and the 38pc fall in equity markets in 2008 for the massive deficit.

Profits at the ESB, which has debts of about €4.5bn, hit almost €250m in the first half of last year, even as the semi-state company piled price hikes on hard-pressed householders.

The semi-state reported profits of €230m for the first six months of 2012 – up from €87m during the same period in 2011. Turnover was up €300m to €1.6bn for the period.

Sold

Some of the ESB's assets are due to be sold off this year by the Government under the Newera unit of the National Treasury Management Agency, as ordered by the troika.

The government target of raising €400m through the sell-off of power stations is being increased to ensure that some of the company's debt is paid off.

The ESB has 13 major power stations at home and abroad – including Ardnacrusha, Moneypoint, Coolkeeragh, Dublin Bay Power, Aghada, Poolbeg, Corby in the UK and Amorebieta in Spain.

Any move to sell power stations could be jeopardised by opposition from unions, which have threatened to ballot for industrial action over any disposal of plants employing hundreds of workers.

The Irish Times reports that Irish Stock Exchange chief executive Deirdre Somers has said the Government needs to consider ways of incentivising young companies here to go public, rather than selling out to trade players, as they seek to scale up their businesses.

Ms Somers has also told The Irish Times the Government should consider listing State assets on the stock market rather than selling them via auctions or trade sales.

Ms Somers said changes to our tax code and a stated Government policy to support the scaling of Irish enterprise were urgently needed to produce the next generation of Irish listed companies to take up the torch from the likes of Kerry Group, Paddy Power and Ryanair.

Action plan 

She called for the Government to establish a “dedicated group to address the IPO [initial public offering] challenge” as part of its action plan for jobs.

Ms Somers said an IPO task force was established in the US to find ways to stimulate activity and its findings were implemented by President Barack Obama in the recent jobs act.

Ms Somers cited the tax treatment of share options as one area that needs to be reviewed: “Why is it that our tax policy incentivises entrepreneurs to exit their businesses before global scale can be achieved? Is there any reason why we should not be saying that Ireland will have five new companies with a market capitalisation of over €1 billion in the next five years?

“Why is it that our tax policy does not reward risk and instead incentivises entrepreneurs to exit their businesses before global scale can be achieved?”

She said more than 90 per cent of employment growth in companies takes place after an IPO. Encouraging businesses to list on the stock market here rather than sell to overseas buyers would be more beneficial for the economy in the long term, Ms Somers added.

Economic multiplier 

“These indigenous companies are more embedded than any foreign multinational would ever be, delivering an economic multiplier and dividend to Ireland for decades to come,” she said.

“The next generation of successful, scalable businesses is not coming through and this should be a major wake-up call for the Government.”

The number of companies listed on the Irish Stock Exchange has fallen from 76 to 52 over the past decade.

In the past year, United Drug and Greencore quit Dublin for listings in London while CRH, the largest company on the Irish market, moved its primary listing to the FTSE index.

Ms Somers said fewer IPOs have been a feature for all stock exchanges since 2007, due to the global downturn. She said 44 per cent of companies had left markets in the US while 35 per cent had left Aim, the UK’s biggest secondary market.

She said 50 companies listed on the market in the 1980s, when Ireland was also gripped by recession. “Markets are cyclical and when this changes we need to be ready,” she said.

Market turnaround 

“That means having companies that can benefit from the market turnaround. However, even State agencies accept that almost all Irish high-potential companies will be sold. This is an issue that Ireland needs to address.”

She said Irish companies WebRez, Cartrawler, Airtricity, Fintrax, Curam and Pallas Foods had “compelling [stock] market prospects” but instead were sold to trade buyers.

Ms Somers called on the Government to consider IPOs for some of the State assets it is preparing to sell, in particular Bord Gáis Energy.

“Why is it that in any other developed economy a [stock] market-based approach to the disposal of state assets would be a preferred option, enabling the state and its taxpayers to crystallise value but retain some of the upside potential for taxpayers – but not in Ireland?”

The Irish Times also reports that tax revenue paid by Ireland’s international financial services companies fell in 2012 as the sector continued to suffer in the global financial downturn.

According to provisional figures compiled by the Revenue Commissioners, companies operating in international financial services throughout Ireland paid corporation tax of €456 million in 2012, a decrease of €10 million, or 2 per cent, on 2011. Companies operating in the sector employ some 33,000 people.

Corporation tax is paid by financial services firms on trading income, indicating total profits of €3.7 billion among such firms in 2012 based on a tax rate of 12.5 per cent. This is a reduction of €80 million, or 2 per cent, on the previous year. The reduction in tax take might also be due to companies carrying forward losses from previous years and using them to offset tax liabilities in 2012.

Falling profits 

At its peak in 2009 the combined International Financial Services Centre (IFSC) and international financial services sector paid some €1.4 billion in corporation taxes, but since then profits have fallen in line with the global financial crisis. The significant reduction is due in part to a reclassification of the statistics by the Revenue.

With the end, in December 2010, of the 10 per cent tax regime that facilitated the launch of the IFSC in 1987, it is no longer possible for the Revenue to distinguish between corporation tax paid solely on IFSC activities and on other income, so some companies are no longer included in the data. An exception is made in the case of the main associated banks, where an estimate of the tax paid by them on their IFSC activities is derived from indicative data.

In 2012 the sector contributed some 10 per cent of total corporation tax revenue, down from 16 per cent in 2010. Banking and associated activities such as securitisation and investment in asset-backed securities have been the hardest hit sectors. Assets fell by more than a third from a high of €540 billion in February 2008 to €338 billion in November 2012, the most recent figures.

Investment funds 

The investment funds servicing sector, however, continues to go from strength to strength, and as of the third quarter of 2012 serviced some €2.2 trillion in funds, up by 23 per cent from the same period in 2011. But there will always be periods of ebbs and flows in international financial services.

While Bank of America Merrill Lynch, for example, might be transferring its Dublin-based derivatives book to the UK, having reported pretax losses of some $453 million (€350 million) in 2011, others such as Citi are doing better. It reported €755 million profits for its Irish operation in 2011.

The Irish Examiner reports that InterTradeIreland is making available €11m to SMEs on both sides of the border to take on graduates in an effort to boost innovation and skills.

The fund will be invested in 135 cross-border projects through the agency’s all island technology transfer programme known as Fusion.

The aim of the programme is to enable SMEs to hire graduates from a science, engineering, and technology background. The graduates gain access to industry skills in return for helping develop technologically innovative and commercially viable projects and services.

Speaking at a company visit to Fusion participant Realtime Technologies, Dublin, Minister for Jobs, Enterprise, and Innovation Richard Bruton welcomed InterTradeIreland’s investment.

“Central to our plans for jobs and growth is creating a powerful engine of indigenous enterprise,” said Mr Bruton. “This programme has the potential to make a major contribution to that, by providing SMEs with access to skilled workers in science, engineering and technology, and by helping graduates gain valuable skills.

“Developing strong indigenous engineering and technology companies will be central to our jobs recovery and the Fusion programme will make a real difference in that area.

“I am determined to build on this through Action Plan for Jobs 2013 to put in place further measures to build our indigenous enterprise base and help create the jobs we need.”

The graduates will be taken on for 12-18 months and will be able to pursue a fully funded postgraduate diploma in business and management.

More than 450 companies have already participated in the Fusion programme to date, with over 85% of graduates offered long-term employment with their host company after the initial phase of the project. On average, companies taking part benefit from over €1.2m in sales, efficiency saving and investments within 3 years of the project.

Commenting on the investment in Fusion, Thomas Hunter McGowan, CEO of InterTradeIreland, said: “We are encouraging SMEs to participate in the Fusion programme, to improve their productivity, increase their revenue potential and to create real jobs for graduates.

“Our further investment in 135 cross-border technology transfer projects is testament to the strength of this programme which delivers tangible outputs for SMEs. Through creating an innovation eco system North and South, we can offer SMEs the potential to externally source and connect with a wider variety of relevant expertise, while collaborating with graduates and universities to deliver product and service innovations.”

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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