Today in the press

Friday 12 July 2013 08.55
A look at some of today's business stories in the newspapers
A look at some of today's business stories in the newspapers

IFSC FACES ‘RADICAL RETHINK’ AS EFFECTS OF CRASH BECOME CLEAR - It started in the 1980s as an idea promoted by financier Dermot Desmond and came to life through tax breaks and legislation enacted by former taoiseach Charles Haughey. Since 1987, the International Financial Services Centre has been one of the success stories of the Irish economy over the past quarter of a century and was a key plank in modernising the economy and attracting high-end foreign direct investment, writes the Irish Times. It contributes more than €2 billion to the exchequer each year and employs about 32,000. But the global financial crash in 2008 and other factors have inevitably affected the IFSC and placed it at a crossroads in terms of its future development. This is highlighted in an internal position paper produced by the Department of Finance last year by Neil Ryan, a former banker who is now assistant secretary in the department and who was seconded to Irish Bank Resolution Corporation for a period. It highlights the challenges facing the IFSC and makes eight proposals that could help it grow. The document has been seen by newspaper and states that the IFSC’s “offering” needs a “radical re-think”. While the IFSC remains an “important” part of the financial landscape here, the global crash in the sector has resulted in some companies winding down their operations and others shedding jobs.

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PAYZONE PRE-TAX PROFITS DROP 50% TO €2.87m - Pre-tax profits at electronics payment business Payzone last year halved to €2.87m after the firm suffered a dip in revenues. Accounts just filed with the Companies Office show that Payzone Ireland Ltd recorded the drop after revenues decreased by 5% from €234.2m to €222.1m in the 12 months to the end of September 30 last, reports the Irish Examiner. Payzone is Ireland’s largest consumer payments network with over 2,000 branded retail agents which process a variety of electronic transactions services, including mobile phone top ups, debit/credit card transactions; M50 motorway toll payments; Leap travel cards, local property tax payments, parking fees and pre-paid utility cards. The firm has been to the forefront in developing the e-payments industry and processes over €50m transactions in Ireland annually in retail, online and mobile phone payments. The firm last year increased its gross profit by 15% from €7.3m to €8.5m. The firm enjoyed an exceptional gain of €4m due to a bad debt write-back in 2011 and this did not re-occur in 2012 and operating profit, excluding exceptional items, was last year up 47% to €2.9m. Managing director of Payzone Ireland, Jim Deignan, described last year’s performance as “successful”, stating that the most notable aspect of the business was the diversification into new areas of electronic customer payments.

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IFSC-BASED FIRM STILL EXPOSED TO LAWSUITS FROM MADOFF SCANDAL - An IFSC-based firm that promotes investments in hedge funds and bonds is still exposed to lawsuits from the Bernie Madoff scandal, four years after the US money manager was jailed for running a vast ponzi scheme. Pioneer Global Investments, which employs 115 staff in Dublin, is involved in marketing and promotion activities for the Pioneer group, says the Irish Independent. The firm was involved in marketing hedge funds and bonds or "notes" caught up in Madoff's global pyramid scheme. Madoff earned notoriety in 2008 when he admitted to running an $80 billion (€55 billion) ponzi scheme, wiping out the savings of investors. He was sentenced to 150 years in prison in 2009. The latest set of accounts filed for Pioneer Global Investments show that as fund promoter it is still open to legal action relating to this, even though criminal proceedings in Chile regarding the notes were closed in July 2012. It said it is not able to predict the extent of this potential liability. Pioneer Global Investments is one of two Irish offshoots owned by Italy-based Pioneer Global Asset Management, whose ultimate parent is Italian banking giant UniCredit. Its Irish operations are located on Dublin's George's Quay. In total, the group employs about 400 people in Ireland, led by American chief executive Robert Richardson.

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'DEBT PERIL’ AWAITS 1.25 MILLION UK HOUSEHOLDS IF RATES RISE - Up to 650,000 more UK households face “debt peril” if mortgage rates rise unexpectedly before the economy returns to full strength, a think-tank warns. The Resolution Foundation said on Thursday that 1.25m households would have to spend half their disposable income on repayments by 2017 if the Bank of England’s official rate rose 2 percentage points higher than forecast without a recovery in wage growth. While more people between 35 and 50 borrowed heavily than other age group, a surprise rise in mortgage rates would hit younger borrowers disproportionately, according to the research says the Financial Times. Families with children were more at risk from “debt peril” than childless couples and single adults. The poor were also more vulnerable - 7% of the poorest fifth of households would see more than half their income eaten up by debt repayments if rates rose unexpectedly, compared with 3% of the richest fifth. The study highlights the threat to recovery posed by UK households’ high debt burden, accumulated during the boom years. At the height of the boom in 2007, 870,000 households faced repayments that were equivalent to half their income or more. The number of households in “debt peril” fell almost a third between 2007 and 2011, as official rates plunged from 5.5% to their current record low of 0.5%.

Keywords: presswatch