Today in the press

IMF WARNED NAMA WOULD NOT LEAD TO SIGNIFICANT BANK LENDING - The International Monetary Fund (IMF) told Minister for Finance Brian Lenihan last April that the National Asset Management Agency (Nama) would not lead to a significant increase in lending by the banks. The comments, which appear in internal Department of Finance documents released to The Irish Times under the Freedom of Information Act, were made by senior IMF official Steven Seelig who will join the board of Nama in May. Minutes of a private meeting at the department between Mr Lenihan and IMF officials on April 29 last state that the "IMF (Mr Seelig) do not believe that Nama will result in significant increase in bank lending in Ireland". The meetings were held for the purposes of the IMF compiling its annual economic assessment on Ireland in the so-called Article IV report published last June. The Government has maintained that Nama's purchase of bad loans from the banks with State bonds would increase the flow of credit in the economy since the plan was unveiled last April. Speaking at the publication of the Nama legislation last September, Mr Lenihan said Nama would "strengthen and improve" the funding positions of the banks "so that they can lend to viable businesses and households". Taoiseach Brian Cowen had said the Government's objective in restructuring the banks was to generate "more access to credit for Irish business at this critical time".

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THIRD FORCE BANK WITH BANK OF SCOTLAND (IRELAND) WOULD RIVAL BIG TWO, SAYS REPORT - A 'Third force' bank which included Bank of Scotland (Ireland) would rival AIB and Bank of Ireland in size, a report prepared on behalf of workers at the UK bank says. The report, by the Farrell Grant Sparks consulting group (FGS) for the the Unite trade union, also concludes that the establishment of such a third force would not mean any additional bill for the taxpayer, says the Irish Independent. The Exchequer is already committed to re-capitalising Irish Nationwide building society, which would be part of the proposed merged entity along with the EBS society and the banking arm of Irish Life & Permanent, Permanent TSB. The Government would therefore have a stake in the group, even if it injected no extra capital and Irish Life would be in line to provide €500 million in capital. FGS, in the report published this morning, says it does not have definitive figures for the levels of capital in Bank of Scotland (Ireland) (BoSI) but understand that it is "appropriately positioned." Bank of Scotland (Ireland) is part of the HBOS bank which was taken over by Lloyds Banking Group after it ran into financial difficulties. Including the subsidiary of such a large British bank would be an unusual step, but the report says it could bring advantages.

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US SHOPPERS SPLASH OUT ON LUXURY ITEMS - More prosperous American shoppers seem to be defying continuing high unemployment levels and economic uncertainty to renew their spending on luxuries such as jewellery, fashion and cosmetics, writes the Financial Times. That is the picture emerging from the current round of US earnings and sales reports. Tracey Travis, chief financial officer of Polo Ralph Lauren, said last week that the fashion brand and retail company had "slowly begun to see the gradual return of our core luxury customer", including buyers of couture dresses that sell for more than $4,000. Fabrizio Freda, chief executive of Estée Lauder, has said that sales of its beauty products at "prestige" stores - such as traditional department stores - had grown faster than at "mass" drugstores and discounters during November and December, reversing the trend seen earlier in the year. "We view this as a return of the aspirational consumer," he said. Sales of cognac in the US had jumped 19% by volume during the fourth quarter compared with the same period last year, according to BNIC, France's trade association of cognac makers.

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UK COMPANY DIVIDENDS CUT BY £10 BILLION AS DOWNTURN BITES - British companies slashed dividends by £10 billionn in 2009 in what was annus horribilis for income seekers, research by Capita Registrars will reveal today. The London Independent says that British listed companies paid out £56.9 billion in dividends last year, a 15% decline on the previous year, the research found. It also showed how reliant investors seeking income from the stock market are on just five companies. Almost half (47%) of all dividends were paid by BP, Shell, HSBC, Vodafone and GlaxoSmithKline. In 2007, these companies accounted for just more than a third of the total (35%). Their four sectors (drugs, telecoms, oil and banking) also now contribute 56p in every pound paid out in UK dividends. Exactly a quarter of all dividends were paid by BP and Shell. Notwithstanding HSBC, which hardly cut its payment, the banking sector performed poorly. UK banks combined cut dividends by half, paying out £6.1 billion less to shareholders in 2009 than in 2008. However, fortunes diverged widely with the partially state-owned banks such as Royal Bank of Scotland and Lloyds Banking Group paying nothing, while Standard Chartered actually returned more cash to shareholders.