Today in the pressWednesday 22 May 2013 10.51
CIE DEFICIT WOULD BE €45m WITHOUT ASSET SALE AND STATE HELP - Coras Iompar Éireann would have incurred a deficit of €45 million last year if it had not received emergency assistance from Government and sold assets, its annual report for 2012 has disclosed. The Irish Times says that the Cabinet yesterday discussed the troubled financial situation at the State transport company after Minister for Transport Leo Varadkar presented the report. According to Government sources familiar with the report, the company reported a surplus of some €11.7 million. But the surplus only came about because of intervention and the exceptional sale of land assets owned by the State company. It received an additional subvention payment of €36 million in 2012 and the sale of properties in Spencer Dock in Dublin yielded a further €20 million. The surplus compared to a deficit of €6 million in 2011. Sources said the report has highlighted that CIE’s problems are more severe than simply a matter of falling State payments under Public Service Obligation (PSO) arrangements. According to the sources, it has underlying problems in terms of revenue: current revenues of €725 million were down by €64 million in 2012 compared to 2011. These figures excluded the monies paid under PSO. The group had an operating deficit of €295 million before State grants, property disposals and interest were taken into account (€298 million in 2011). The report has projected that there will be further deficits in 2013 and 2014 but has predicted a return to profitability in 2015.
BANK OF IRELAND CUTS ITS 'OWN USE' BOND ISSUE BY €1.5 BILLION - Bank of Ireland has reduced its outstanding stock of so-called 'own use' bonds by €1.5 billion. The unusual bonds have been a feature of the financial crisis and are used by banks to create collateral that is used to borrow from the European Central Bank (ECB), writes the Irish Independent. It means that, unlike traditional bonds, the debt the bonds represent is never held by outside investors. Banks were able to use the 'own use' bonds as collateral at the ECB, as long as the debt was backed by a government guarantee. Irish banks have been issuing such so-called own-use, or self-held, bonds since 2011. At the time all of the main banks were locked out of the bond markets and struggling to raise private sector debt. The €1.5 billion of bonds that Bank of Ireland has now repurchased were part of €5 billion issue of the bonds done in the last week of March this year, just before the ending of the bank guarantee. However, the €5 billion of bonds has now been reduced to €2 billion, including an earlier redemption.
GERMANY OFFERS JOBS AND APPRENTICESHIPS TO YOUNG SPANISH JOBLESS - Germany has agreed to give jobs or apprenticeships to about 5,000 young unemployed Spaniards every year, under a deal signed by labour ministers from both countries in Madrid on Tuesday, reports today's Financial Times. The deal reflects rising concern in Berlin and other European capitals about a looming social crisis in countries such as Spain, where the rate of youth unemployment now stands at 57%. But it also highlights Germany’s growing need for qualified workers, which is fuelled both by demographic changes and by the recent strong performance of the German economy. The move forms part of a broader European drive to increase labour market mobility across a recession-scarred continent, where language barriers and cultural differences still make it much harder for workers to find jobs outside their home country. About 1.8 million Spaniards under the age of 30 are unable to find a job, leading analysts to point out that the offer of 5,000 jobs and training positions in itself was unlikely to make a meaningful difference. Fátima Báñez, Spain’s employment minister, hailed the accord as “a big step forward for young people in Europe” all the same. Ms Báñez and Ursula von der Leyen, her German counterpart, added in a joint statement that the deal would soon be followed by additional measures to improve job prospects for young people in both countries.
RBS AND LLOYDS STAKES SHOULD BE SOLD, SAYS IMF - Britain will be advised to sell off the state's holdings in the Royal Bank of Scotland and Lloyds Bank by the International Monetary Fund (IMF) in a move that will embolden George Osborne as he attempts to justify his economic strategy. The London Independent says that according to reports, the IMF will make clear that public ownership of the two banks is not in the interests of the UK's economic recovery. The recommendations will be a boost to the Chancellor as he attempts to win public support in ditching the taxpayer's 81% stake in RBS and 39% stake in Lloyds. However, the conclusions of the IMF's annual "health check" on the economy is also expected to reiterate calls for Britain to slow down the pace of deficit reduction amid sluggish growth. It is the latest in a fractious relationship between the Treasury and the IMF, which have been split over the future of Britain's economic strategy. Last month, the fund abandoned its support for the Chancellor's austerity measures. Before they arrived in London a fortnight ago, IMF staff indicated that the only reasons why they might change their assessment that Britain "should consider" a more flexible deficit reduction strategy would be if the Government changed its policy, or if signs of much stronger private-sector spending materialised.