Today in the pressTuesday 12 February 2013 09.27
BANKER SAYS HIS RESIGNATION SENT ‘CULTURAL SHUDDER’ THROUGH RBS - John Hourican’s decision to quit Royal Bank of Scotland over its involvement in the Libor manipulation scandal has sent “a cultural shudder” through the 83% state-owned bank, he has told a British inquiry writes the Irish Times. Top bank executives must now abandon habits of displaying “blind trust” in highly paid market traders but, instead, be able “to trust, but verify”, he told the House of Commons Banking Standards Commission yesterday. “I do accept responsibility for the failure of our staff and therefore I do accept responsibility for the failings that were found,” he told one of the commission’s members, the recently appointed Archbishop of Canterbury, Dr Justin Welby. However, the commission chairman, Conservative MP Andy Tyrie, said Mr Hourican had acted “as a human shield” for others in RBS, who will remain on despite being in charge while the scandal was in full operation. Mr Hourican, who was one of five senior RBS executives and directors to appear before the inquiry, was reputed to have been Ireland’s best-paid banker at the height of the credit boom. The danger that market traders hunting for extra profits could gain illegal advantage by manipulating the Libor rates had been discounted because no one believed it could be done as so many banks were involved, the RBS said. RBS did not make money from the trades, said Mr Hourican’s former colleague, Johnny Cameron: “We can’t say that it benefited the bank. It may have benefited one trader’s portfolio at the expense of another one. In fact, the bank might well be worse off.”
BUSINESSES SAVE €13.5m A YEAR AFTER NAMA AGREES 212 RENT REDUCTIONS - NAMA approved 212 applications for rent reductions from businesses last year, with an annual aggregate rent reduction value of €13.5m, says the Irish Examiner. Alan Shatter, minister for justice, said that although legislative intervention may not be feasible for upward-only rent reviews, NAMA is playing a role in dealing with problems by reducing rents on its properties. In a written Dáil response to Fine Gael TD Nicky McFadden, Mr Shatter confirmed that “a further 56 applications are currently under review. Of the 276 eligible applications received to date only eight have been refused, representing a 97% approval rate by Nama.” The chief executive of the Cork Chamber, Conor Healy, said yesterday that upward-only rent reviews are providing major challenges to business. “It has come to the point where tenants are not in a position to pay any increase in rent and are either leaving premises to go elsewhere or renegotiating with landlords.” Mr Healy said he hoped the rent reduction applications are being replicated in non-Nama properties. Mr McFadden asked the minister if he had any plans to re-examine the upward-only rent reviews in the context of the Irish arm of the DIY chain B&Q going into examinership. In December 2011, the Government said it would not be proceeding with legislation on abolishing upward-only rent review clauses in commercial leases.
ANGLO MUST DECLARE WHETHER IT WAS SOLVENT IN 2009 - An official of the former Anglo Irish Bank must swear a "yes or no answer" as to whether the bank was solvent in 2009 when it allegedly gave €88m in loans to a developer, a judge has said. The Irish Independent says that a solicitor for developer Kevin McNulty had sought court orders requiring that all documents be disclosed, or "discovered", relating to Anglo's solvency after September 2008 as part of his client's defence to proceedings brought against him by a NAMA company which took over the Anglo loans. One of the "fundamental defences" being advanced by Mr McNulty and his companies was that Anglo, which was nationalised in January 2009, was insolvent when it purported to make the alleged loans, solicitor John Larney said in an affidavit to the Commercial Court. While there was "a wealth of evidence in the public arena" suggesting the bank was insolvent since 2008, such material woud not constitute the proof required by a court and that was why discovery was being sought, Mr Larney said. Mark Sanfey SC, for NAMA, opposed discovery relating to Anglo's solvency, saying it was not relevant to the issues to be decided in the case. The loan facilities at issue were increased, extended and refinanced between 2000 and 2009, he added.
EDF SEEKS STATE BACKING ON NUCLEAR SITE - EDF Energy has asked the Treasury to guarantee some of the costs of the new nuclear reactors it will build in the UK, in a move likely to spark controversy for a government that has pledged not to provide public subsidies for the industry writes the Financial Times. The French company’s planned multibillion-pound nuclear power station at Hinkley Point, Somerset, was one of the UK’s “top five” infrastructure projects, and as such could be eligible for a state-backed guarantee, a person familiar with the matter said. But he added that talks between EDF and the government were at an early stage and formal discussions would start only once the two sides had agreed on a fixed price for the nuclear power generated at Hinkley. The coalition has repeatedly stressed there will be no public subsidy for new nuclear reactors in the UK - marking Britain out from other countries where governments often underwrite the costs and risks associated with nuclear power. EDF is asking the government to underwrite some of the project’s financing, which could make it more attractive to third-party financial investors such as pension funds, rather than the construction risk.