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News : International Last Updated: Jun 18, 2014 - 2:39 PM


Wednesday Newspaper Review - Irish Business News and International Stories - - June 18, 2014
By Finfacts Team
Jun 18, 2014 - 11:25 AM

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Irish Independent

The head of KBC Bank in Brussels told investors that a merger of its Irish unit with a rival is not on the cards.

However, a sale of KBC Ireland could happen after the unit returns to profit, targeted for 2016.

The comments will be seen as a blow to RBS's hopes of engineering a tie-up between its Ulster Bank unit here and a potential partner – possibly KBC or Permanent TSB – to create a so called "challenger" to AIB and Bank of Ireland.

KBC did look at the option of merging its Irish banking unit with the Irish unit of another, undisclosed lender, KBC Group chief executive officer Johan Thijs said yesterday.

However, it opted not to enter talks about a potential deal because, in its view, criteria such as price and capital position meant it was not a realistic option, Mr Thijs said.

He was speaking at the bank's Investor Day in Brussels.

The U.S. Federal Reserve is widely expected to chop another $10bn from its monthly bond purchases at a meeting this week but make few, if any, other concrete policy moves.

Given the lack of drama, all eyes will be focused on whether officials tip their hand on longer-term plans for interest rates.

Policymakers, including new Fed Vice Chair Stanley Fischer, will release updated projections for the economy and for when they think rates should finally rise from near zero. They could also surprise investors with more detail on how they plan to eventually shrink the U.S. central bank's swollen balance sheet.

The policy-making Federal Open Market Committee (FOMC) kicked off its meeting Tuesday at 10 a.m. Eastern (1400 GMT) with a special discussion on the mechanics of how to raise rates when the time comes, jointly with the Fed's Board of Governors.

Here are the key things to watch in the policy statement and economic projections, which will be released on Wednesday at 2 p.m. (1800 GMT), and in a news conference by Fed Chair Janet Yellen that will start a half hour later:

* Is the Fed more upbeat on employment and inflation?

The economy has bounced back from a tough winter. More than 200,000 jobs were added in each of the last four months, lifting U.S. employment to its pre-recession peak; inflation has firmed slightly though it's still well below the Fed's 2-percent goal.

THERE has been a surge in people contacting the pensions ombudsman as up to €500m is sitting in "lost" accounts.

Ombudsman Paul Kenny said thousands of people who moved jobs years ago are now finding it difficult to trace their retirement benefits.

"I think there are probably thousands of people out there who have pensions that they cannot find," he said.
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Problems locating lost retirement funds can be due to companies going out of business, but failing to shut down the pension fund.

Or perhaps the company that sponsored the pension has since been taken over, he said.

People who have moved jobs a number of times and those who have worked abroad may have misplaced pensions.

"We know that pension providers have numbers – possibly thousands – of orphan schemes on their books, that should have been wound up, but were not," he said.

US medical device maker Medtronic Inc is raising $16.3bn (€12bn) in a senior unsecured bridge loan to finance its $42.9bn (€31.7bn) acquisition of Dublin-based Covidien Plc, banking sources said.

It comes as London-listed drugmaker Shire has hired investment bank Citi as an adviser, expecting to receive its own takeover approaches following a wave of deals in the healthcare sector, sources familiar with the matter said.

Much of the dealmaking has been fuelled by US companies including Medtronic seeking lower tax rates abroad. With Shire's tax base in Ireland – where effective corporate tax rates are among the lowest in the world – and a mid-sized market value of around $35bn, (€25.8bn) it is seen as a prime target, analysts and bankers believe

Irish Times

Up to €40 billion, or almost half, of the annual profits made by Irish-registered companies fall outside the corporate tax net because so many multinational subsidiaries here declare they are tax resident elsewhere, it was claimed at an Oireachtas committee meeting yesterday.

Jim Stewart, an associate professor of finance at Trinity College Dublin who studies the tax avoidance practices of multinationals, told the subcommittee on global taxation that many US multinationals paid tax “where it suits them”.

“If you put your name on a shoebox somewhere for six months, you can get your tax residency there,” said Dr Stewart. Using figures for 2011, he has estimated that about €83 billion of “profit-type” earnings were attributable to Irish companies that year.

Finfacts: Are American companies stupid to pay corporate tax in Ireland?

Australia’s Coles supermarket chain faces fines of up to $3.3 million (€ 2.27million) for passing off bread as “fresh, baked today and sold today” when in fact it had been first baked in Ireland, Denmark and Germany months earlier.

Investigators from the Australian Competition and Consumer Commission (ACCC) said the bread had in fact been made on the other side of the world before being frozen and transported to Australia.

ACCC launched proceedings against Coles a year ago, accusing the company of misleading consumers.

Martin Wolf: How much of the world’s fossil fuel reserves will eventually be burnt? This is not just a question for those concerned with climate policy. It is also a question for investors even if they believe (absurdly, in my view) that the science of climate change is a hoax. What, they must ask themselves, would it mean for my investments in fossil fuel exploration and production if policymakers acted on their expressed belief in the science of climate change?

Where would that leave investments in companies that own reserves today and are investing in exploration and additional production for tomorrow? Might all this spending prove a disastrous waste of resources that would be better deployed elsewhere?

Japan’s annual exports declined for the first time in 15 months in May as shipments to Asia and the United States fell, threatening to knock the economy hard at a time when domestic consumption is being crimped by a national sales tax increase.

The data backs expectations for additional stimulus from the Bank of Japan in coming months, particularly if market confidence takes a hit as external demand proves elusive.

Total exports fell 2.7 per cent May on the year, Ministry of Finance data showed on Wednesday, compared with a 1.2 per cent drop seen by economists and a 5.1 per cent rise in April. On a seasonally adjusted basis, exports fell 1.2 per cent in May from the prior month.

The central bank is counting on exports growth to partially offset the impact of a sales tax hike to 8 per cent from 5 per cent in April, but the MOF data will be a worry for policy makers.

Irish Examiner

Joe Gill: It is time to put the Employment and Investment Incentive Scheme out of its misery.

It was introduced by the Government in 2011 as a means of connecting individual investors with SME companies for the purpose of growth and expansion. It has failed, and a new version of it is urgently required.

The scheme was invented as a replacement for the Business Expansion Scheme (BES) which had worked reasonably well as a source of company funding. IBEC states about €44m was raised on average each year between 2003 and 2007 to help promote and stimulate company expansion using BES. The investors, in exchange, received a tax break for providing low risk capital to private companies.

The Employment and Investment Incentive Scheme, in contrast, has been a poor substitute. Funding in 2013 fell away to about €12m as investors deemed it complicated, relatively risky, and offering low upside. Without a overhaul designed to introduce a simple system that offers reasonable upside, the scheme will struggle to provide much-needed equity capital to SMEs.

Europe

Euro Topics: The advance of the radical Islamic organisation Isil has prompted the US to send soldiers to Iraq again for the first time in two and a half years. A special unit comprising 275 troops is being sent to protect American citizens, US President Barack Obama announced. This new deployment highlights once more the futility of the US invasion in 2003, commentators say and voice fears that terrorism may now take on epic proportions.

Isil also a threat for the West: The founding of a theocracy in Iraq by the Islamist militia Isil would pose a huge threat to the entire West, the conservative Spanish daily ABC warns: "No Western country should feel unaffected by the advance of the jihadists in Iraq. Because if Iraq falls into the hands of an al-Qaeda affiliated organisation this would have incalculable consequences for a region prone to the domino effect of civil wars and sectarian conflicts. ... If after Iraq Syria also fell into the hands of the terrorists, we would witness an unprecedented expansion of terrorism. ... Although there have been no major attacks in Europe in recent years, this should not fool us into thinking that the threat no longer exists. ... Terrorism takes on different forms, and not always do they have the dimensions of 9/11 or 11-M [the attack on a train station in Madrid on 11 March 2004]."

Islamists face Obama with dilemma: The US has not ruled out the possibility of negotiations with Iran in the fight against the terrorist movement Isil. The conflict in Iraq faces President Obama with a huge dilemma, the left-liberal Dutch daily De Volkskrant comments: "On the one hand it's logical: Isil is a common enemy. On the other hand the US sees Iran as the biggest strategic threat in the Middle East because of its nuclear programme and its support for Syrian President Assad. How easily can you convert an enemy into a shorter- or longer-term friend? Does this mean that Assad can not only stay put, but will also become a partner in the fight against Isil? ... There is a growing danger that America must not only wrestle with the question of what kind of a superpower it wants to be, but that it no longer knows who its true friends and enemies are."

It's no longer about Juncker: The social democrats in the European Parliament announced on Tuesday that they would make their support for Jean-Claude Juncker conditional on a loosening of the Stability Pact. That shows that the question of whether Juncker is the right man for the job has long since become secondary, the left-liberal German daily Süddeutsche Zeitung writes: "The main thing is that the name Juncker has become the catch-all phrase for a fundamental, long-overdue discussion. The national governments must agree on how the Europe of the future should be shaped. ... Demonstrating a common will to reform would require a cleverly presented package listing European policy priorities, together with the readiness to implement them. And on top of that a set of personnel decisions agreed on with the EU Parliament."

Work must be worthwhile in Denmark too: According to an estimate by the Danish Finance Ministry, roughly 42,500 employees in the country earn less after taxes than welfare recipients. That's simply unacceptable, the liberal-conservative daily Berlingske writes: "The Finance Ministry's figures point to very problematic conditions in a country where hard-working taxpayers toil away under the highest tax burden in the world, while each year 300 billion kroner [roughly 40 billion euros] are distributed in welfare payments. There is an untenable imbalance between the money citizens are allowed to keep and manage for themselves and the money that is generously doled out by the public authorities. This imbalance must be corrected. We must put an end to this redistribution farce that few people really understand."
 


© Copyright 2011 by Finfacts.com

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