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News : Irish Last Updated: Mar 1, 2013 - 9:22 AM

Friday Newspaper Review - - Irish Business News - - March 01, 2013
By Finfacts Team
Mar 1, 2013 - 9:17 AM

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The Irish Independent reports that the Competition Authority said it investigated both the National Asset Management Agency and RTE last year as it seeks to bolster competition and stamp out cartels.

Both organisations were found to be operating inside the law although RTE was forced to change the way it sells ads the previous year. The probe into NAMA followed several complaints over the past three years alleging that it abused its dominant position in the hotel and golf course sectors. The complaints were not upheld.

Recently appointed chairwoman Isolde Goggin said yesterday that the authority is looking forward to more success this year now that it has more staff and a permanent boss. The troika has repeatedly complained that the authority does not have enough manpower and forced the Government to boost the number of experts at the agency.

The authority made the comments as it unveiled a report on last year's activities which also included the successful prosecution of 18 people linked to an oil cartel.

The final prosecution in the long-running case was secured with the conviction of Pat Hegarty in the Galway Circuit Court last May.

The authority also hailed the decision to prevent the acquisition of book wholesaler Argosy by Eason.

The authority received 233 complaints last year including 13 new complaints of alleged criminal-cartel behaviour.

The Irish Independent also reports that Finance Minister Michael Noonan said six staff at the agency shared bonus payments of €43,000 last year. That compares to €62,610 paid out in bonuses to five staff at the NTMA in 2011, and €1.9m shared by 258 NTMA staff in 2010.

None of the six staff who received bonuses last year work at the National Asset Management Agency, which operates under the NTMA umbrella.

Mr Noonan added that 1,088 individual employees and four groups of staff at the Revenue Commissioners shared €165,077 in "exceptional performance awards" last year, while a further group of around 1,000 people received an average of around €4,000 each for overtime and the like.

In a written Dail response to Independent TD Thomas Pringle, Mr Noonan said 59 staff at the NTMA received additional payments of €140,500. The agency paid €170,364 to 74 employees in 2011.

"These payments were to employees on lower salaries who contributed significant additional work hours," said Mr Noonan.

"The NTMA does not have formal overtime payment arrangements in place for staff."

NTMA boss John Corrigan was paid €446,100 made up of €416,500 in basic salary and taxable benefits of €29,600. NAMA boss Brendan McDonagh got €388,164 made up of €365,500 and taxable benefits of €22,664. They agreed to waive 15pc of their salaries and have not got a bonus in three years.

The NTMA falls outside public sector pay grades, where a €200,000 pay cap applies.

Mr Noonan also said that the chief executive of the National Development Finance Agency (NDFA), Brian Murphy, received €324,762 that included a basic salary of €297,000 and taxable benefits of €27,762.

The Irish Times reports that European Commission president José Manuel Barroso expressed confidence that Ireland could return to the financial markets by the end of the year during a visit to Dublin yesterday.

Taoiseach Enda Kenny and Tánaiste Eamon Gilmore held talks in Government Buildings yesterday with the president of the European Parliament Martin Schultz and Mr Barroso.

Mr Barroso said he was not suggesting things were easy for people or pretending that all problems had been settled.

‘Turned a corner’ 

“I keep to my confidence that Ireland will be able to have a full coming back to the markets before the end of this year. It is in this sense that I believe that Ireland has turned a corner,” he said.

“We are very well aware of the huge difficulties that are still faced by many Irish citizens and we have the greatest respect for those sacrifices that were made.

“In Ireland and in other parts of Europe without these kind of measures we could not see the light at the end of the tunnel. I think it’s fair to say that now regarding Ireland we can see light at the end of the tunnel.” He said Ireland had been recovering in confidence and confidence was critically important for growth.

Mr Schultz said European colleagues had to show solidarity with Ireland and “stick to the promises” made previously.

“I think the Europeans should not forget that the Irish people avoided – with a lot of burdens they put at the end on their shoulders here – a crash of the whole European banking system,” he said.

However, it emerged yesterday that a decision by euro zone finance ministers on Ireland’s request for an extension of the maturities of some of its bailout loans has been delayed.

Finance ministers from the 17 euro zone member states had been expected to deliver their verdict on a request by Ireland and Portugal to extend the maturity of their loans at next Monday’s meeting of finance ministers.

However, an EU source confirmed that a final decision will not be made, and the discussion is still “preliminary”.

“As the exit from [their] programmes is still quite quite far away, I have no reason to believe that there will a final discussion or decision on any possible changes to the loan maturities,” he said, adding that it was “a bit early” to say what the economic and market situation will be at the end of the programmes.

Bailout programme 

Ireland has been hoping that an agreement to lengthen some of the loans that constitute its bailout programme will help to lower its borrowing requirements, and ease its exit from the bailout. But the delay indicates that the proposal is meeting some resistance from member states, including Germany. While an agreement is still expected to be reached in some form, the scope of any arrangement is now under discussion.

Ireland’s €67 billion bailout programme comprises €17.7billion from the European Financial Stability Fund (EFSF) which is controlled by the 17-member states.

A further €22.5 billion comes from the European Financial Stability Mechanism, which falls under the control of the 27-strong European Union.

Discussion is under way to seek profiling of both portions of the debt, though a final decision is likely to be predicated on the response of euro zone finance ministers.

The IMF is not expected to agree to a lengthening of the maturities of its loans, worth about €22.5 billion.

The Irish Times also reports that a sharp decline in department store sales led to another fall in retail sales last month.

Figures from the Central Statistics Office (CSO) show the volume of retail sales fell by 1.7 per cent in January compared with the previous month.

The figures indicated sales declined by 1.2 per cent on an annual basis in January, the second largest fall in six months.

When motor sales are factored out, the volume of retail sales fell by 1.3 per cent in January compared with the previous month but rose by 0.7 per cent on an annual basis.

Department stores saw sales plummet by more than 15 per cent during the month, while bar sales fell 8.1 per cent, with motor sales down by 3.6 per cent.

Total retail sales have now fallen by more than 25 per cent since the start of the recession.

The CSO noted that car sales were down 23.1 per cent in January compared with the same month last year.

The biggest monthly increase in the retail sector was in the furniture and lighting division which saw sales rise 6.6 per cent.

Sales were also up in the fuel sector (+1.6 per cent) and for non-specalised stores (+0.2 per cent).

Retail sales 

The CSO’S figures show the value of retail sales fell by 1.7 per cent in January when compared with the previous month but increased 1 per cent in annual terms.

If motor trades are excluded, there was a decrease in the value of retail sales in January of 0.5 per cent and an annual increase of 0.9 per cent.

Goodbody economist Juliet Tennent described the figures as “somewhat disappointing”.

However, she said six of the 13 CSO retail categories were showing annual increases in the volume of sales, with electrical goods and department stores “leading the way”.

Retail Ireland, the Ibec group that represents the retail sector, said when motor trades were excluded, the annual figures were positive but that the sector was “a long way from a sustained recovery”.

Director Stephen Lynam said: “There was a sharp retraction in sales in the first quarter of last year, after initial hope that the worst was over.

“To ensure this is not repeated, it is vital that Government take steps to boost consumer confidence and reduce retailer costs.”

‘Lack of vision’ 

But Mark Fielding of Isme, which represents small and medium-sized businesses, criticised the “lack of vision and ambition” for the retail sector contained in the Government’s recent action plan for jobs.

“It is obvious that little or no thought has been put into addressing the retail problem in the current plan,” he said.

The Irish Examiner reports that Ulster Bank chief executive Jim Brown has firmly ruled out debt forgiveness in the range of options it will offer customers to solve the mortgage arrears crisis.

"We do not support debt forgiveness,” he told the Irish Examiner following the release of the bank’s 2012 results.

“We are very confident that we can put in place an arrangement that meets the customers’ needs. We will work with customers on a case-by-case basis. We have a range of options and we will work with customers to resolve the issue, but debt forgiveness is not one of those options.”

Mr Brown said the average duration of a mortgage was between 20 and 25 years. The bank’s aim was to keep the mortgage holder in the family home. However, repossessions will inevitably go up among all the banks, he added. He would like to see a credit bureau set up that provided comprehensive details of every distressed mortgage holder’s total debt. Secured lending such as mortgages should be given priority in repayment schedules, he said.

He also welcomed the introduction of the personal insolvency legislation.

Moreover, he would like the Government to look at the landmark Dunne case. This refers to a Jul 2011 ruling by Justice Elizabeth Dunne that prevented GE Capital repossessing a home on the grounds of mortgage arrears because of a loophole in existing legislation.

Ulster Bank has 13,500 customers who are in receipt of some forbearance measures. Mr Brown says “mortgage arrears have peaked or are close to peaking.” He expects the pace of losses to gradually reduce over 2013. However, he declined to put a timeframe on when the bank is likely to return to profitability.

The bank has an €11bn tracker mortgage book. This book is burning capital because the margins do not cover arrears or the elevated cost of funding.

Ulster does not plan to hive off the tracker mortgage book into a special purpose vehicle. “What we have to do is reduce the losses and reduce our cost base.” However, if there was an industry-wide solution for tracker mortgages, then Ulster would be interested in taking a look. “But there is nothing in place at the moment.”

The bank’s net interest margin averaged 1.8% over 2012. The chief executive would like to see the net interest margin eventually reach 2.5%. The cost of deposits are still at a premium to what they should be and products are still not priced appropriately for the level of risk, he said.

The loan to deposit ratio is 130% and the aim is to reduce this to 100% through the continued divestment of non-core assets. The core tier one capital ratio is roughly 10%.

The current headcount is 6,000 but this will fall to 5,500 at the end of the year on the back of restructuring plans announced in 2012.

Its parent, Royal Bank of Scotland, has pumped over £15bn (€17.5bn) into Ulster since 2008 to shore up losses — which has in the past prompted speculation that it could be sold on or closed down. Mr Brown dismisses such speculation. “Ulster Bank remains a core part of RBS.”

The bank had a very high-profile technical glitch last summer that affected payment services to 600,000 customers over a five-week period. Its IT system is now fit for purpose though there will be investment to make it more robust, said the New Zealand-born CEO.

Mr Brown declined to comment about the property developer Seán Dunne. Ulster recently got permission to serve bankruptcy proceedings against him on foot of an outstanding €164m debt.

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