RONAN AND BARRETT'S LAST JEWEL 'HEADING FOR DEFAULT' - The remaining Irish jewel in Johnny Ronan and Richard Barrett's empire is likely to default on debts of €460m next month, rating agency Standard & Poor's has warned. The warning comes as the huge property loans come due for repayment on January 15, says the Irish Independent. The debts are linked to a high-end portfolio of major Irish commercial properties, including the Stillorgan Shopping Centre in Dublin and Merchants Quay in Cork. Office blocks in the portfolio include Bank of Ireland's new headquarters on Mespil Road in Dublin and KPMG's offices on Stephen's Green. They escaped being caught up in the collapse of Ronan and Barrett's Treasury Holdings into liquidation earlier this year. That's because a complex borrowing technique known as commercial mortgage-backed security (CMBS) structure, which is separate to Treasury's bank debts, was used to finance the portfolio. The CMBS structure uses bonds and is known as "Opera Finance CMH". It faces crisis when the loans fall due next month. "We consider that the CMH loan is likely to default at loan maturity in January 2013. "In view of this, and current market conditions, we have lowered our expectation of recoveries from the properties and we anticipate that losses may be incurred on the loan and the notes," Standard & Poor's has warned.
CREDIT UNION FINED €21,000 FOR RULES BREACH - A credit union has been fined €21,000 over its failure to ensure it could prevent and detect money laundering and terrorist financing, writes the Irish Examiner. The Central Bank said it had imposed the penalty on the Dublin-based Community Credit Union Limited for breaching regulations. Central Bank director of enforcement Peter Oakes said the penalty, imposed on the Navan Rd-headquartered union, follows inspections in all regulated sectors of the financial services industry to monitor compliance. "Credit unions have an important role to play in the financial services sector, providing services to credit union members throughout the country, and savings under management of almost €12bn," he said. "They therefore play an integral part in efforts to prevent the use of the financial system for the purposes of money laundering and terrorist financing." He added: "Firms must also maintain awareness at board level of the need to continually review the appropriateness of their risk-based anti-money laundering and counter terrorist financing measures as business evolves." It is the first time an administrative sanction has been imposed on a credit union and only the second time a firm has been sanctioned for non-compliance with money laundering and terrorist financing laws which came into force in Jul 2010.
BAUGUR CHIEF INDICTED IN ICELAND - The most prominent of Iceland’s one-time corporate raiders has been indicted by the country’s special prosecutor in the latest attempt by the Nordic island to uncover alleged wrongdoing from its dramatic financial crisis, reports today's Financial Times. Jón Ásgeir Jóhannesson, who once bought up swaths of the UK high street through his investment company Baugur, was charged in last week’s indictment alongside the former chief executive of Glitnir, one of Iceland’s biggest banks. The entrepreneur became the epitome of both Iceland’s boom and also its painful bust after a group of oligarchs used cheap credit to build global empires that crumbled as Iceland’s overleveraged banks collapsed. At one stage, Baugur owned UK retail chains such as Hamley’s, House of Fraser and Oasis.“It is part of a bigger tale. It is important to how this was actually, how our financial institutions were operating before the crisis,” Olafur Hauksson, the special prosecutor behind the indictment, told the Financial Times. The case, which is due to go to court on January 7, relates to a loan from Glitnir, which had Mr Jóhannesson as a leading shareholder, to a holding company to buy a large stake in Aurum Holdings, a jewellery group.
POOR HAVE SUFFERED BIGGER HIT TO INCOMES THAN RICH, SAYS BANK SURVEY - The poor have seen their incomes squeezed more than the rich over the past year and households are reining in spending as they grapple with uncomfortably large debt burdens, a new survey commissioned by the Bank of England reveals today. The London Independent says that the survey, published in the Bank's latest Quarterly Bulletin, found that 62% of households in the lowest quartile of the income distribution said that their after-tax income declined over the past year. That contrasted with 48% of those in the top quartile of earners who reported a drop in after-tax incomes. The survey, conducted for the Bank by NMG Consulting, said average monthly pre-tax incomes fell by £43 in 2012, to £2,627. Modest wage increases over the year were eroded by increases in VAT, higher energy prices and more expensive imports. And CPI inflation of 2.2% implied an even steeper drop in real incomes. The survey also showed that 12% of households were "very concerned" about the borrowing levels, while a further third said they are "somewhat concerned". Those with high loan-to-value mortgages were the most nervous about borrowing levels.