Today in the pressTuesday 19 February 2013 09.06
NAMA TARGETING €3.5 BILLION IN SALES THIS YEAR AS TWO LOAN BOOKS GO ON MARKET - NAMA expects to sell €3 billion to €3.5 billion of assets this year, as the agency moves ahead with the sale of two major portfolios of property loans. The news comes as liquidators of the former Anglo Irish Bank dismissed reports that they are putting €2bn of property loans up for sale, writes the Irish Independent. NAMA has faced recent criticism in the press for being seen to be slow in disposing of its almost €30 billion of assets. The agency has rejected the criticism, insisting it must act carefully in maximising value for taxpayers. Last year NAMA, headed up by chairman Frank Daly and chief executive Brendan McDonagh, generated €4.4 billion in cash, with €4.3 billion of it coming from sales and much of the rest made on rents. NAMA's new sales target was confirmed by a spokesman for the agency. It is in the market with two large scale portfolios of property loans, including debt linked to commercial assets in Dublin that are becoming increasingly popular with international investors. Bids are understood to be due by the end of this month for NAMA's €810m 'Project Aspen' loan book that is being sold through agents Eastdil Secured.
PROMISSORY DEAL A BREACH OF ECB RULES, STARK SAYS - Ireland’s new promissory note arrangement is a clear breach of the European Central Bank’s prohibition of monetary financing, the former ECB executive and chief economist Jürgen Stark has said. The Irish Times says that Dr Stark’s disapproval follows fresh criticism from the Bundesbank in its monthly report yesterday that the deal underlined “increasingly stronger and more problematic inter-linkage between monetary and fiscal policy in the European monetary union”. These arguments reflect a long-term fear of German monetary hawks that the ECB, in its efforts to assist in resolving the euro zone crisis, has broken its own rules, compromised its independence and made itself beholden to politicians. Dr Stark said yesterday the arrangement with Ireland was a further demonstration of “the ECB’s new understanding of crisis management”. “The ECB’s contractual basis and core mandate shift further into the background,” he wrote yesterday in Die Welt daily. Dr Stark resigned in protest at ECB bond-buying of crisis-hit euro states in 2011, following Bundesbank president Axel Weber out the door. Both have since been regular critics of the bank’s crisis strategy. “An independent central bank . . . cannot turn the prohibition of monetary financing into a bargaining chip,” Dr Stark said.
POWER CITY PRE-TAX PROFITS FALL 16.7% TO €4.9m - Pre-tax profits at family-owned electric and electronic retailer, Power City last year fell by 16.7% to €4.9m in spite of a surge in revenues. The Irish Examiner says new figures show the Dublin-based firm recorded the drop in profits as revenues increased by 8% from €69.5m to €75.3m in the 12 months to the end of Sept 29 last year. The profits of €4.9m follow profits of €5.8m in 2011. The figures show that at the end of September 29 last, the company had accumulated profits of €81.1m. Numbers employed at the McKenna-owned firm last year increased by 25 to 224. According to the directors’ report “the directors are satisfied with the results for the year”. The filings show the company paid a dividend of €920,000 to its shareholders in 2012, following a dividend payout of €1.8m in 2011. The accounts show that the cash-rich firm had cash of €45.9m at the end of September last. Power City’s stores are located in the eastern part of the country, with its Dublin stores at Tallaght, Sallynoggin, Finglas, Coolock, Fonthill, while there are also stores in Bray, Naas and Drogheda.
DUBLIN FACES SUIT OVER IBRC LIQUIDATION - Ireland faces a raft of potential lawsuits and a possible constitutional challenge over its decision to liquidate one of its failed banks as part of a deal to restructure €28 billion in bank debts, reports the Financial Times. The Irish parliament earlier this month passed emergency legislation to wind down Irish Bank Resolution Corporation, and for the Central Bank of Ireland and Nama, the country’s “bad bank”, to take over most of IBRC’s assets. Although the complex deal, codenamed “Project Red” by the government, markedly lowers the debt repayment burden facing Dublin in coming decades, the political and legal ramifications are only now beginning to sink in. “It’s absolute chaos,” said a lawyer close to the situation. “It appears that the Irish government has taken this step for it own financial benefit with little thought or care for the repercussions.” IBRC’s unsecured creditors - which include trade suppliers, local credit unions, external accountants and lawyers, investors and potentially even some depositors - face big losses, and could even be wiped out. Some may end up suing the Irish authorities over the alleged undervaluing of the bank’s assets when they were taken over by the Central Bank of Ireland. The most valuable of these assets - promissory notes, in effect government IOUs - had been used as collateral for borrowing from the central bank. Following the liquidation they have been seized by the CBI and replaced by longer term, low coupon government bonds. Brokerages have started to offer IBRC creditor claims to hedge funds, some of which are considering buying them and taking on the Irish authorities in court to extract a better deal.