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News : International Last Updated: May 23, 2014 - 12:11 PM


Friday Newspaper Review - Irish Business News and International Stories - - May 23, 2014
By Finfacts Team
May 23, 2014 - 9:14 AM

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Irish Independent

ALAN Shatter has caused huge embarrassment for Enda Kenny by accepting the €70,000 severance pay that he had voted to do away with.

Although the former Justice Minister is giving the money to charity, the Taoiseach and other former cabinet colleagues had earlier indicated that they expected him to forego the payment.

Fine Gael TDs are reeling after his decision to call a large media briefing, at which he was effectively seen as defying his party, less than 17 hours before voting began in the local and European elections.

The party's candidates fear that his latest controversial move will damage their prospects.

The Dublin South TD kept the Taoiseach in the dark about what he was going to do even though Mr Kenny had earlier said that he expected Mr Shatter to hand the money back to the Exchequer.

THE GOVERNMENT is in preliminary talks with France's development bank to secure an extra source of potential cheap credit for Irish SMEs.

The news comes as the Department of Finance unveiled details of the new state-backed Strategic Banking Corporation of Ireland (SBCI) which will lend to small and medium businesses under favourable terms.

More than half-a-billion euro will be initially available with lending expected to start by the end of the year.

Under the scheme, existing main street banks will borrow from the SBCI and lend to SMEs. The banks will assess the risk of lending and will continue to hold that risk. But the lenders must demonstrate that the lower cost of sourcing the funds is passed on to SMEs.

Development of badly needed office and residential accommodation in Dublin city centre will accelerate in the coming years after a large-scale planning scheme for the Docklands was given the green light.

The National Asset Management Agency (NAMA), Kennedy-Wilson and Oaktree are among site owners expected to benefit from a fast-track planning process approved by An Bord Pleanála yesterday.

Some 366,000 square metres of office space and 2,600 homes will be developed across 22 hectares of land in the North Lotts and Grand Canal Dock under the Docklands Strategic Development Zone (SDZ) planning scheme.

Two landmark buildings up to 22 storeys (88m) are allowed, but most development will be eight-storeys high.

Stockbroker Cantor Fitzgerald said it is upgrading forecasts for Allied Irish Bank after the lender's "exceptionally strong" interim statement published last week.

AIB announced that it had returned to underlying profitability in the first quarter. That was "a couple of quarters earlier than we had expected", Cantor analyst Fiona Hayes said yesterday.

The bank "effectively enjoys duopoly status in new lending alongside Bank of Ireland" and is well placed to benefit from the recovery in the domestic economy, the stockbroker said.

"It appears that we grossly underestimated the pace at which impairments would decline in 2014 with the bank guiding that impairments had fallen "materially" from the first quarter of 2013," she wrote in a note to clients.

Irish Times

The Government will establish an €800 million lending fund for small and medium-sized businesses by the end of the year after Ministers gave the go-ahead for the body, known as the Strategic Banking Corporation of Ireland (SBCI).

Minister for Finance Michael Noonan said the SBCI – backed by German, European and Irish money – would provide lending arrangements not currently available to SMEs in Ireland.

“The best way to see it is to see it as a fund, to see it as a big fund. We expect it over a five-year period to end up with a balance sheet of about €4 billion,” Mr Noonan said.

The Government aims to enact legislation this summer to set up the fund, with €500 million credit available initially. “I would expect that we would have funds of about €800 million at the end of this calendar year,” said Mr Noonan. Institutions The principal institutions backing the SBCI include Kreditanstalt für ~Wiederaufbau (KfW), a German state-owned promotional bank which borrows at favourable rates on the back of guarantees from Berlin. The KfW’s involvement follows engagements between Taoiseach Enda Kenny and German chancellor Angela Merkel.

Sir Anthony O’Reilly is locked in negotiations with AIB in relation to his multimillion euro debts in advance of the State-controlled bank seeking a summary judgment against him at the High Court next week.

The one-time billionaire is being represented in the talks by Bernard Somers, a debt restructuring specialist and former non-executive director of AIB. Mr Somers is a close associate of Sir Anthony.

A case has been listed for entry into the Commercial Court on Monday between AIB and Sir Anthony and two of his investment vehicles, Indexia Holdings and Brookside Investments.

Brookside owns Sir Anthony’s coastal estate in Glandore, Co Cork, while Indexia is his private investment vehicle that holds his near 5 per cent stake in Independent News & Media and his share of the oil explorer Providence Resources.

A workforce manager with Intel Ireland has urged the High Court not to give the company a “second bite at the cherry” by allowing it call more evidence and re-examine her at a Labour Court hearing into alleged harassment and gender discrimination.

Marie Cunningham said granting the company’s application would mean further delay when more than five years had passed since she first brought her case alleging the Kildare-based firm discriminated against her in failing to restore her to the same position she held prior to going on maternity leave in 2007.

She also alleged she was bullied and harassed on her return to work before going out on stress-related sick leave in December 2008.

Facebook has bowed to pressure from users and tightened up its privacy controls, ensuring that posts from new users are set to only be visible to friends.

In a blog post today the company said the default audience for new users’ initial posts on Facebook will be set to their friends only, instead of the current setting which makes them public. The social network will also check with users who are posting publicly that they are sharing their updates with the correct audience.

“While some people want to post to everyone, others have told us that they are more comfortable sharing with a smaller group, like just their friends. We recognise that it is much worse for someone to accidentally share with everyone when they actually meant to share just with friends, compared with the reverse,” Facebook said.

Irish Examiner

The forthcoming ECB stress tests are unlikely to cause any major problems for Irish banks, according to NUIG economics lecturer and former government adviser Alan Ahearne.

The stress tests parameters, which were released last month, are similar in scope to the prudential assessment capital review conducted by the Central Bank in March 2011, said Mr Ahearne. At the time the banks were sufficiently well capitalised to withstand the worse case scenario outlined in that assessment.

“This would suggest that the banks are unlikely to need huge amounts of new capital on this occasion,” said Mr Ahearne at the RaboDirect investor seminar in Cork.

The stress tests are part of the ECB’s comprehensive assessment of the eurozone banking system over the course of this year. Any banks that fail will be forced to raise new capital.

UCD economist Morgan Kelly caused a storm in early March when he claimed there was a huge quantum of bad SME debt sitting on the balance sheets of the banks.

Europe

Euro Topics:  China has committed to buying natural gas from Russia for thirty years. An agreement for deliveries worth around 400 billion US dollars was signed as President Vladimir Putin's visit to China drew to a close on Wednesday. Putin has caught the West off guard with this alliance, some commentators say. Others see the deal as an indication of Moscow's weakness.

Russia and China surprise the West: The new alliance between Moscow and Beijing has caught the West off guard, the conservative Spanish daily La Vanguardia comments: "A tremendous performance in Shanghai. ... The plot: Putin pulls off a strategic turnaround to show the world that he's not alone. And China secures part of the energy it will need to continue on its dizzying growth curve. ... A surprising turnaround that has caught the West fully unprepared. The speed with which Russia and China clinched this energy deal forces the West to correct its stance towards Moscow. Putin has demonstrated the sovereignty and diplomatic skill to break out of his international isolation and once more assume an important role in global politics. China, for its part, is on the way to taking the economic pole position."

Putin's victory just an illusion: Putin's victory is illusory, the Italian Catholic daily Avvenire writes: "In fact the decisive turn exists only on paper. Because at least three and a half years will go by before a single one of the planned 38 million cubic metres of gas flows through a pipeline that has yet to be completed. Consequently the repercussions of the agreement for the current highly explosive Ukraine crisis will be rather modest, even though the propaganda machine is hyping up the deal for public opinion in Russia. ... What is sure is that the gas deliveries will also bring home to 'Czar Vladimir' that Russia's true essence is its location between two continents and its ability to maintain a balance between East and West. If Russia is now increasingly turning to China, that means abandoning as too ambitious its goal of casting itself as a geographic linchpin of history."

Europe needs more than economic clout: In response to China and Russia's intensified cooperation the EU must bolster its common foreign and defence policy, the state-run Austrian Wiener Zeitung writes: "To cling to the strong arm of the US or Nato would be fatal because American foreign policy pays little attention to Europe's interests. ... Again and again there have been calls for a common European foreign policy but in the end it's always the foreign ministers of Germany, France or the UK who get active. That's not surprising; these three countries have the strongest armies. The EU, on the other hand, has no troops and the term 'soft power' has become worn-out in Brussels. Therefore the size and the economic clout of the European Union are supposed to do the job. But will that be enough in the case of China, which will overtake the US as the biggest economy this year?

European elections: Like it or not, Merkel's in charge: The opinion research institute Millward Brown has forecast a turnout of just 29 percent in Poland for the European elections, one of the lowest in Europe. The conservative daily Rzeczpospolita shows some understanding for this, pointing out that when all is said and done only one person is in charge in Europe: "Who really decides questions of European politics? ... Is it really the European Parliament? That's a joke. We all know that only Angela Merkel's word counts. Just for fun we could say that general elections in Europe would only really make sense if we could directly elect the German chancellor. People are openly saying that Berlin doesn't like the new way in which the Commission President is to be elected. For that reason it's likely that someone who's not among the official candidates will get the job."

There's no getting around the oligarchs: The chocolate manufacturer Petro Poroshenko could become the new president of Ukraine, the businessman Rinat Akhmetov has called for protests against the separatists, and other influential entrepreneurs are currently sitting at the round table with the OSCE. The fact that the oligarchs are now looking like beacons of hope in Ukraine is worrying for the liberal business paper Handelsblatt: "The new old power of the oligarchs also underlines the size of the democracy deficit in Ukraine. Money rules the country. Nothing has changed on that score in the post-Yanukovych era. A clear majority in the Kiev parliament is directly dependent on the oligarchs. That does not bode well for the country's future. And yet it is perhaps the last chance for the tormented country. But there is one small ray of hope: at least the most promising presidential candidate, the chocolate king Poroshenko, sided quickly with the opposition on Maidan and promised to sell his empire if he is elected."

Finnish state doesn't have to run distillery: The Finnish government wants to sell the state-owned alcoholic beverage producer and importer Altia. Critics are concerned about job losses and fear this could be the end of the traditional Finnish liqueur Koskenkorva. The liberal daily Pohjalainen is less pessimistic: "These are certainly hard times, but at the same time the intended takeover offers a major opportunity to give the distillery a boost. The past few years have been very difficult for the distillery and the entire company in terms of profitability. ... The whole group needs new growth and development prospects. So the question of who takes it over if it is sold in the near future is vital. It's time to admit that the state is by no means automatically the right and best owner for a company. ... Altia needs to develop, and for that it requires investment. Under state ownership this doesn't seem possible."


© Copyright 2011 by Finfacts.com

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