The Irish Independent reports
that parents were left in fear of more cuts to child benefit after Education
Minister Ruairi Quinn indicated he would spend the money elsewhere.
The minister sparked anger in the Coalition by
raising the prospect of further cuts, and his comments caused worry amongst
Mr Quinn said he wanted to start a debate about providing a second year of free
pre-school care by using some of the €2bn spent on child benefit every year.
His comments prompted disbelief in government circles, because it has heightened
fears of a child benefit cut by putting the issue on the agenda.
Although Joan Burton and Frances Fitzgerald have spoken about reforming child
benefit and providing more childcare services, neither were as specific as Mr
Government figures were taken aback by Mr Quinn's behaviour, some saying they
had "no idea" what Mr Quinn was talking about and why he decided to raise the
Parents accused Mr Quinn of "robbing Peter to pay Paul" if child benefit
payments were cut and the cash then used to fund pre-school care.
And a government source said: "There is no problem having a philosophical
conversation (but) there is no cost structure. How do you pay for it?
"Cost the debate, and start from there. The notion is fine, but quite premature.
He's about 10 steps ahead."
Labour TDs are not keen on further cuts, having already come under fire for
breaking their election promise to protect child benefit in the last Budget.
And Mr Quinn's department also had to admit that he got his figures wrong on the
current cost of child benefit during a radio interview. He put it at €20bn, but
that is the entire social welfare budget, with the cost of child benefit being
There was an immediate backlash to Mr Quinn's remarks from campaign groups and
Parents Against Cuts to Child Benefit spokeswoman Niamh Ui Cheallaigh said:
"He's robbing Peter to pay Paul. It won't be very welcome to hear this for a lot
of families, they will be horrified, to say the least."
And the National Women's Council of Ireland director Orla O'Connor said child
benefit had already been cut enough.
There is no appetite in the Government to implement a further child benefit cut
in the forthcoming Budget in October.
Labour TDs face a dilemma as they favour providing the extra pre-school year,
but are not keen on funding it with further cuts to child benefit.
Labour Louth TD Ged Nash said the issue of providing a second pre-school year by
cutting child benefit would be a "medium to long-term decision".
Another senior Labour TD said he did not think that going after child benefit
again would be a "runner".
"It would be very hard to tell a mother to take a cut in child benefit if she
wasn't going to get the second pre-school year for her child," he said.
However, despite all the caution from within the party, Mr Quinn said he had
already raised the issue of using part of the child benefit budget to pay for an
extra pre-school year with Social Protection Minister Joan Burton and Children's
Minister Frances Fitzgerald.
He said: "Could we spend it in a more effective way so that the benefits of
early education and pre-schooling for young people stay with them for the rest
of their lives and long after they have been entitled to receive child benefit?
That's a debate I think that we need to have."
He was speaking at a children's education conference in Dublin, where Oxford
University educational researcher, Professor Pamela Sammons, told delegates that
research had shown that a "quality" pre-school education is worth more to a
child than a family income boost of €12,000.
And despite the concern in Government circles, Ms Burton and Ms Fitzgerald
supported Mr Quinn's intervention in the child benefit debate.
However, Fianna Fail children's spokesman Charlie McConalogue criticised Mr
Quinn for "kite flying".
"It cannot be at the expense of supports for older children from lower-income
families who will miss out on this direct investment," Mr McConalogue said.
Independent also reports that the Central Bank is to launch a pilot project to
force credit unions to take a financial hit when distressed mortgages are
restructured, despite failing to get agreement on a deal.
Credit unions have been resisting attempts by regulators to force them to take a
financial hit when mortgages are restructured.
Regulators want the credit unions and other unsecured lenders to accept losses,
with warnings that they will be forced to make higher provisions if they resist
Head of banking supervision in the Central Bank, Fiona Muldoon, has headed up
talks between banks and credit unions in the past few months in a bid to work
out what is called a "burden-sharing" deal.
The talks have been deadlocked, with credit unions refusing to accept they
should face having to write down most of loans they advance to those in mortgage
Credit unions claim irresponsible lending mainly emanated from the banks.
In a bid to unlock the stalled process, Ms Muldoon has proposed a pilot project
be run to see how much various lenders lose when a hundred mortgages are
Close to 100,000 residential mortgages are in arrears for three months or more.
Ms Muldoon said: "I expect that lenders participating in the pilot scheme will
include the main retail banks and many credit unions as well as other unsecured
lenders. The Central Bank will be closely engaged and will oversee the pilot."
But the Irish League of Credit Unions has not endorsed the new pilot project and
said it was considering its position.
The league is known to be considering launching a political campaign to oppose
what it considers an unfair policy of forcing mortgage losses onto the community
Last month the new regulator for credit unions, Sharon Donnery, warned credit
unions that they will be forced to push more reserves aside if they do not agree
with banks on losses when there is a shared borrower in arrears.
Credit unions have to put aside 10pc of a loan into their reserves at the moment
if payments on that loan are not being met. But Ms Donnery suggested at the
annual general meeting of the league that much higher levels of reserves could
be demanded by the Central Bank if the householder is in arrears on the credit
Central Bankers are concerned that many in mortgage arrears are prioritising
paying back the credit union over repaying their mortgage. This is because they
fear they will have no access to credit if they default on the credit union
The Irish Times
reports that overstretched borrowers could receive a write-down or
write-off of some of their debt following an agreement struck yesterday by the
Central Bank between secured and unsecured lenders.
Starting next month, a pilot scheme will seek to agree arrangements with a
sample of 750 borrowers to restructure their debts. These are people who are not
technically insolvent but who have significant debts with multiple lenders.
The pilot is designed to provide a sustainable
outcome for borrowers and would see repayments being made to the various lenders
to reflect their credit exposure to an individual and level of loan security.
The new framework follows weeks of intensive and difficult negotiations brokered
by the Central Bank between secured and unsecured lenders. Photograph: Brenda
FitzsimonsThree-month pilot scheme to provide relief for debt arrears
Borrowers will be able to deal with the lenders through a third-party service
provider. This will propose a restructuring arrangement.
The framework is designed to allow borrowers to remain in their homes, although
in hopeless cases repossession and bankruptcy is provided for as a worst-case
A range of solutions will be offered to borrowers depending on their debts. This
will range from six months’ grace on their debts to loans being extended in time
with reduced interest rates.
Mortgage repayments could be extended out to age 65 to have the principal amount
repaid in full.
In some cases, “significant mortgage restructure” options will be considered,
including split mortgages, where part of the loans is warehoused; negative
equity tradedowns; and “other solutions”.
In these scenarios, secured lenders could allow the repayment of other loans on
a proportionate basis for a two-year period. After the two years are up, the
remainder of the unsecured loans could be written off in certain circumstances.
This is where lenders could apply write-downs or write offs. In a worst-case
scenario, borrowers will be moved towards insolvency or bankruptcy or have homes
This framework does not apply to buy-to-lets or business-related loans.
The Irish Banking Federation said its members would engage “constructively” in
the scheme and it had “considerable potential” for those in arrears.
Kevin Johnson, chief executive of the Credit
Union Development Association, said there was “merit” in the pilot study. “There
has been significant pressure from vested interests to provide solutions in this
area without carrying out some form of impact analysis,” he said.
“We believe the pilot will go some way to providing the necessary impact
information, before we return to the talks to see if we can agree a formula that
is genuinely helpful for credit union members who find themselves in multilender
The Irish Times also reports that investment vehicle
TVC Holdings is to return €50 million in surplus cash to shareholders as part of
a special dividend of 49.5 cent per ordinary share.
The move was prompted by what the Dublin-listed company said were the “very
limited number of investment opportunities” and a review of its strategic and
financial options to enhance shareholder value.
The group generated an annual return on its portfolio of €9.3 million for the
year to the end of March on the back of a successful asset sale and a general
rise in the value of its remaining investments
Its figures were boosted by the disposal of its stake in software developer TAS
Group for €7.4 million last August, which realised a gain of €3.9 million.
The company said profit before tax for the year was €6.6 million.
TVC said net asset value per share stood at €1.21 at the end of March, compared
with €1.14 a year previously, representing a 6 per cent increase.
Cash and government bonds increased by 9.5 per cent during the year from €72.6
million to €79.5 million.
The board said it had decided, subject to shareholder approval, to return €50
million of surplus capital to shareholders in the form of a special dividend of
49.5 cent per ordinary share.
After adjusting for the payment of the proposed dividend, TVC’s net assets would
be €72 million.
This included stake in media group UTV, valued at €32 million; three unquoted
investments valued at €11 million; and cash of €29 million.
“Against a backdrop of continued economic uncertainty, for the fourth
consecutive year the Company’s NAV per share has grown, driven by the sale of
our investment in The TAS Group, realising proceeds of €7.4 million, and
unrealised value growth in our investment portfolio,” said executive chairman
“We believe that our selective investment approach is the correct strategy. TVC
will continue to look for value enhancing investments and to manage its existing
portfolio in order to maximise value for all our shareholders”.
The Irish Examiner
reports that Mostly loss-making tracker mortgages continue to weigh on the
profitability of the banks. The Government had proposed to “warehouse” the
trackers in a special asset management unit, which would be funded by the ECB.
Mr Noonan noted there was a similar proposal outlined in a German newspaper last
“It is an option we will continue to explore.”
Mr Noonan appeared before the committee to brief members ahead of the meeting of
eurozone economic and finance (EcoFin) ministers next tuesday. Top of the agenda
will be proposals for a banking union.
Fianna Fáil TD Michael McGrath wanted to know how proposals for a common
resolution regime would impact on Irish banks.
The minister said a lot of details still have to be agreed. But he wants
Tuesday’s meeting to improve the seniority of depositors in the event that a
bank’s creditors are bailed in.
The plan would be for ordinary shareholders to get hit first, then junior
bondholders followed by senior debt and then depositors, he added.
The minister drew a distinction between insolvent banks and banks that would
need to be recapitalised following a stress test. Rules on whether and when a
bank could be recapitalised through the ESM or a common resolution fund still
had to be agreed and how that would apply to the Irish banks.
Replying to a question by Fine Gael TD Peter Mathews, Mr Noonan said no date had
yet been agreed for the stress tests. However, the banks are very well
provisioned for bad debts and he did not believe that they would have to be
The extension on the EU loans as part of the bailout programme, agreed at the
informal EcoFin meeting in Dublin last month, will be formally ratified at the
EcoFin meeting in June. The NTMA will have to “sit down with the relevant funds”
to work out a reprofiling of the debt.
Senator Sean Barrett wanted to know was there any link between the proposed
financial transaction tax and the exodus of some banks from the IFSC. Mr Noonan
said there was no link.
Over the past few years the pendulum may have swung from regulation being too
light-touch to being too onerous for the IFSC.
“I don’t believe that it has, but I will ask the Central Bank to look into it.”
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