IL&P CAUGHT IN THE CROSS FIRE OF IRELAND INC - The future has now been prescribed by the stress tests and the Government decision for two pillar banks - AIB and Bank of Ireland. Irish Life and Permanent was told it must sell all the profitable parts of the group to raise as much of the €4 billion that is needed to meet new capital strength requirements.
Gerry Hassett, the chief executive of Irish Life Retail, has said that work on selling the business will start immediately with an outcome expected in three to six months. He said it will seek a listing on the Dublin and London stock exchanges.
Mr Hassett said that Irish Life is a very valuable, vibrant business with an embedded value of €1.6 billion. He said the business has had quite a lot of interest shown in it already and is a low risk, very financially secure business. He also reassured its 750,000 policyholders that the events yesterday has no impact on them.
Mr Hassett said that yesterday was a tough day for Irish Life and Permanent and its shareholders. He said the rules of the game changed and says that perhaps the institution was caught in the crossfire of the bigger Ireland Inc picture.
He said that the capital required for IL&P as outlined yesterday is to offset potential loan losses, but whether those losses actually arise will only be seen in the fullness of time. He said that Irish Life and Permanent had hoped to avoid a capital injection from the Government - which up to yesterday it had managed to do - and had hoped to keep the group together.
However, he added that yesterday's stress tests have brought certainty to the Irish banking industry and signals a new chapter in the evolution of Irish Life. Mr Hassett said his main goal today is to reassure staff and customers that the business is a vibrant one.
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TIME TO FORTIFY IRISH BANKS - EBS Building Society was told yesterday by the Finance Minister that it will be merged into AIB. The lender needs €1.5 billion of capital to reach the targets set by the stress tests yesterday.
The chief executive of EBS, Fergus Murphy, said he did not know until yesterday that EBS was to be merged with AIB but it was time to look at the future and 'fortify' Irish banks. He said the Central Bank has adopted a sensible and prudent approach to the banking crisis, that EBS was smaller than both Bank of Ireland and AIB and it made sense to merge with a larger institution. He said both banks were 'old and venerable institutions' who have supplied much to the Irish economy over the years. He said that despite the mistakes over the last few years, the banking sector needs to start again and build around those two institutions. He said he believed banking would go back to a community ethos and provide finance in a prudent way.
He said that Ireland was over-banked in the past and he expected there would be rationalisation through time. He added that those discussions had not started. EBS currently employs 650 staff but Mr Murphy said he would not put a figure on how many staff members it would retain following the merger with AIB.
He said he was confident that yesterday's announcement had drawn a line under the banking crisis. Mr Murphy said he was happy doing his job and hoped to remain in his position for the foreseeable future.
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MORNING BRIEFS - On the currency markets, the euro is worth $1.4160 and 88.23 pence sterling.
