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News : International Last Updated: Jun 9, 2014 - 2:34 PM


Monday Newspaper Review - Irish Business News and International Stories - - June 09, 2014
By Finfacts Team
Jun 9, 2014 - 8:16 AM

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Irish Independent

PAY talks are set to begin at the country's two largest banks after a five-year wage freeze for thousands of workers.

The Irish Bank Officials Association which represents 6,000 staff at Bank of Ireland, said pay increases were back on the agenda after the bank's return to profitability. It is carrying out a review of pay at the bank, though no pay claim has yet been lodged.

The IBOA is expected to begin similar negotiations at AIB, where it represents 6,500 staff, and which is also back in profit.

The union is the latest to seek wage improvements following a series of pay increases in other sectors, as the economy shows signs of recovery.

Employers including Tesco, Boots, Brown Thomas, Debenhams, Dunnes Stores, Marks & Spencer, Glanbia, and Medtronic, have already agreed to wage rises in the region of 2pc to 3pc.

In March, bailed-out Bank of Ireland became the first major bank to return to profit since the financial crash, following pre-tax losses of €569m last year.

SIX homes in a new social housing estate in Drogheda are to be demolished because of pyrite.

The pyrite was discovered in building blocks and it is understood to be one of four sites – including an €8.6m school extension in north Dublin – known to be affected.

Chemical tests are currently being carried out on the walls of the 1,000-student Ardgillan community school, and a detailed report will be provided for the Department of Education.

Residents of the affected 25-house Drogheda scheme were due to move into the homes at Christmas.

However, six of the houses are scheduled for demolition today, and there is also uncertainty about the future of other dwellings in the cluster.

Among those affected by the disruption to the scheme are a number of people with disabilities, including a child.

Ulster Bank is at risk of losing control of almost 50,000 Irish mortgages to bondholders as a result of credit rating downgrades by Moody's.

Individual mortgages would not be affected if the accounts – which were bundled together by the bank to be used to borrow on the markets – were taken over by bondholders acting through trustee Deutsche Bank.

But homeowners would get a letter telling them of the change.

Ulster Bank borrowed against the Irish mortgages during the boom through a process called securitisation.

That process saw as much as €10bn raised by the bank on the market using the mortgages as collateral. As part of that scheme the bank committed to protect the value of the security for the life of the deals – which run until as late as 2047 and 2055 in some cases.

Six separate notices were issued on the Irish Stock Exchange on Friday night warning that Ulster Bank had fallen outside the terms of its securitisation agreements which included to "maintain ratings on its long-term unsecured, unsubordinated, unguaranteed debt obligations equal to or greater than BBB by S&P or Baa2 by Moody's".

Christine Lagarde has asked whether she needs to grovel on her knees before George Osborne over the IMF’s incorrect warnings on the UK economy, as she warned against raising taxes.

“Do I have to go on my knees?” Ms Lagarde, the head of the International Monetary Fund said, when asked whether she has apologised to George Osborne over the fund’s low growth forecasts and calls to adopt a ‘Plan B’ of less austerity – calls the body now accept it got wrong.

The growth the UK is enjoying now has “resulted” from George Osborne’s policies, she said. The growth now appears to be “pretty sustainable” because it is being driven by private sector investment as well as households consuming more.

A year ago Oliver Blanchard, the IMF’s chief economist, warned Mr Osborne was “playing with fire” with austerity and downgraded Britain’s growth forecast to just 0.7pc for 2013. Instead, it grew by 1.7pc, and is expected to hit 2.7pc this year.

“We got it wrong,” Ms Lagarde told the Andrew Marr Show. “We acknowledged it. Clearly the confidence building that has resulted from the economic policies adopted by the government has surprised many of us.”

Irish Times

Merrill Lynch International Bank (MLIB), Ireland’s largest bank when measured by the size of its balance sheet, shifted a net $84 billion worth of financial assets out of Ireland to the UK over the last year.

The total amount shifted by the bank over the last two years is $187 billion, meaning assets roughly equivalent in size to the entire Bank of Ireland group have disappeared from the Irish financial sector since the end of 2011.

The figures are contained in the 2013 accounts for MLIB, the main international arm of the giant Bank of America Merrill Lynch corporation, which were filed in recent days at the Companies Registration Office.

The other day I gave a talk to about 80 middle-aged, mainly male tax experts. I asked them to put up their hands if they considered themselves to be passionate about their work. About half of them stuck their arms in the air at once, and the rest, seeing which way the mood was going, hastily put theirs up too.

There was nothing obviously passionate about these men; they looked wan and defeated after a morning spent watching someone go through a couple of hundred slides on the niceties of transfer pricing. But their response did not surprise me in the least.

An Indian banker on a mission to build a people-focused financial-services giant has been crowned EY World Entrepreneur of the Year.

Uday Kotak fought off stiff competition from 10,000 entrepreneurs in more than 50 countries worldwide to take the award at a gala ceremony in Monaco on Saturday night.

Turning down a steady job, Mr Kotak took his chances in a highly regulated, closed economy and founded Kotak Mahindra Bank in 1985 with seed money of $250,000. He said he noticed India’s main banks were lending money at 17 per cent and only paying depositors 6 per cent. “The banks were getting an 11-point spread . . . state-owned banks that were supposed to be building society.”

Aer Lingus has described the planned strikes by cabin crew at the airline next week as “reckless and “unwarranted”.

In a letter sent yesterday to the trade union Impact, which represents the cabin crew, the airline urged an immediate withdrawal of the notice of the work stoppages which are planned to take place on Monday June 16th and Wednesday June 18th.

Aer Lingus accused Impact of cynically distorting its position in talks last week to generate a contrived basis for announcing further strike action. The company said that Impact had inaccurately suggested that management had walked out of talks last week which were aimed at resolving a row over rosters.

Irish Examiner

Solely relying on traditional bank credit will only inhibit growth and job creation in SMEs, a new survey has warned.

The study — carried out by market research company, Behaviour & Attitudes on behalf of leading SME funder, Bibby Financial Services Ireland (BFSI) — claims that nearly three quarters of Irish SMEs don’t shop around enough when seeking credit and that banks aren’t in a position to adequately finance the needs of the small business community.

“The traditional banking model is outdated and no longer in a position to adequately finance the range of varied funding requirements of SMEs,” according to BFSI managing director, Ronan Horgan.

Europe

Euro Topics: ECB can't ensure recovery on its own: The members of the Eurozone must also do their bit to ensure economic recovery, The Financial Times comments: "There will always be limits to how far monetary policy alone can turn round the eurozone economy. Mr Draghi may be an able central banking tactician but he is not a magician, capable of conjuring recovery from thin air. Other measures will be needed. If the ECB's Asset Quality Review finds big holes in banks' capital, the eurozone will need a plan to fill them. No revival of bank lending is likely until the sector is soundly capitalised. National governments must also look to their responsibilities. Many eurozone states, notably France, and Italy, need to complete structural reforms to boost competitiveness."

Raising salaries better than cutting interest: A completely different approach is needed in the fight against deflation, the liberal French weekly Marianne believes: "If there's a threat of deflation, the Eurozone governments' policy of cutting salaries and budgets is to blame. ... The simplest, quickest and most efficient solution is not to make cheaper money available, but to increase buying power so that consumption strengthens the economy and drives up prices. ... But even simpler than that would be to just raise salaries. ... Rising salaries and prices, shrinking deficits, new export markets for products, new jobs. ... That's what progress looks like. It's time to remember the meaning of this word."

G7 puts too little pressure on Russia: The G7 states agreed on concrete demands vis-à-vis Russia at their summit on Thursday. Among other things the Moscow leadership is to stem the flow of separatists and weapons into eastern Ukraine, otherwise it will face further sanctions. The agreed measures aren't tough enough and pave the way for disaster, the German news portal tagesschau.de comments: "An important demand, if not the most important, is Russia's withdrawal from the Crimean Peninsula - where the occupation began. But that, German Chancellor Angela Merkel said at the end of the summit, was not even discussed. There's also a lack of consensus on what to do about the ongoing fighting in south-eastern Ukraine - whether that alone is not enough to trigger sanctions. But instead the deadline is to be extended until the end of June - and then they'll see whether any progress has been made. Meanwhile eastern Ukraine is facing a humanitarian disaster."

Double strategy needed with Putin: French President François Hollande on Thursday welcomed Vladimir Putin at the Elysée Palace a day before the D-Day 70th anniversary celebrations - and shortly after the G7 states jointly threatened Russia with stiffer sanctions. This double strategy vis-à-vis Moscow is necessary, the Christian social Dutch daily Trouw observes: "It would be so much better for peace on the European continent if the countries that fought together against the Nazis 70 years ago were once again allies - this time fighting for democracy and human rights. That this is not the case is mainly because of Putin. His autocratic style in his own country, and above all his aggression against neighbouring Ukraine make it impossible for the US and Europe to maintain normal relations with Russia. ... This demands two types of policy: punitive measures to set limits. And diplomacy to seek solutions."


© Copyright 2011 by Finfacts.com

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