Today in the pressMonday 09 December 2013 10.37
US FUND CLOSES IN ON SHELBOURNE DEVELOPER LOANS - A US investment firm is on the verge of taking control of the loans secured against the Shelbourne Hotel, as the influx of overseas money into the commercial property sector continues, reports the Irish Independent. Kennedy Wilson, which has spent more than €300m on Irish property in the last year, agreed to buy Bank of Ireland's loans that were used to finance the purchase of the Shelbourne in Dublin by a host of developers including Bernard McNamara and Jerry O'Reilly, who bought the hotel in 2004 and carried out a lavish renovation of the hotel. Bank of Ireland and Anglo Irish Bank funded the deal to the tune of €103m each, but the deal went sour after the property bubble collapsed. The loans expired in 2009 and the lenders have been able to call in the loans at any time since then. The potential terms of the deal have not been disclosed, but the off-market transaction effectively gave Kennedy Wilson control over 50% of the five-star hotel. Having secured the Bank of Ireland share of the Shelbourne loans, Kennedy Wilson is now believed to be in the box seat to buy the Anglo portion of the loan, which is part of the Project Evergreen portfolio of IBRC loans that are being sold off at the moment.
PROFITS PLUNGE AT DUBLIN-BASED STATE STREET UNIT - Pretax profits at the Irish fund-administration arm of the US financial giant State Street, which reports its performance here in dollars, fell last year by 21.5% to $91.2 million (€66.5 million). State Street Holdings Ireland (SSHI) also reported a decline in sales in 2012 of 7.6% to $247.8 million, writes the Irish Times. The division, which employs about half of State Street’s 2,000 staff in Ireland, paid corporation tax of $11.2 million, an effective rate of close to 12.5%. SSHI’s staff numbers fell during the year by 73, to 978 employees. The fund administration business is now sitting on capital and reserves of $372 million. Its directors make reference in the accounts to a “departure” from rules governing how goodwill should be amortised in the accounts. Goodwill is usually written off over several years in a company’s accounts. In SSHI’s figures, however, goodwill of $145 million is not written down because “of the strength of the underlying business”. “The directors are satisfied this departure from the requirements of the companies acts is necessary for the overriding purpose of giving a true and fair view,” the accounts state.
TV’S REIGN OVER AD SPENDING TO END AFTER THREE DECADES - Television’s hold on advertising budgets is beginning to falter, with forecasts indicating its share of global advertising is to peak after three decades of growth, says the Financial Times. Television is expected to capture 40.2% of the $532 billion global ad market in 2013 before falling to 39.3% of the total market in 2016, according to Publicis’ ZenithOptimedia. WPP’s GroupM is also predicting that TV’s share of the global advertising market will decrease slightly in the coming year. The transition is the result of digital media chipping away at television’s dominance amid broader upheaval in the industry. ZenithOptimedia forecasts that the internet will boost its share of the ad market from 20.6% in 2013 to 26.6% in 2016. Within that category, mobile advertising will grow by an average of 50% a year between 2013 and 2016, contributing 36% of extra ad spending. TV will account for 34% of new ad spending, with newspapers and magazines declining by an average of 1% and 2% a year. In recent years, marketers poured money into digital ads largely at the expense of print media. TV not only held its ground but grew as marketers sought to reach mass audiences.
BOB DIAMOND RETURNS TO THE CITY WITH LAUNCH OF NEW AFRICA BANKING BUSINESS - Bob Diamond, one of the most controversial bankers in the UK to emerge from the financial crisis and the man ousted as boss of Barclays after a direct intervention by the Bank of England, is making a dramatic return to the City with the launch of a new Africa banking business. The financier once dubbed the "unacceptable face of banking", is attempting to raise $250m (£153m) by floating a fund on the London Stock Exchange within the next two weeks, says the Guardian. The newspaper says he plans to use the proceeds to buy a stake in an African bank with a presence in several countries across the continent. As part of the deal, Diamond is teaming up with an African entrepreneur called Ashish Thakkar, the 32-year-old chief executive of Mara Group, a conglomerate with "technology, manufacturing, real estate and agriculture" interests in 19 African countries. It is anticipated that both men will sit on the new public company's board. Diamond's choice of London to float his first major banking venture since leaving the City will surprise many, even though it is thought to reflect London's supposedly better ties with Africa, compared with Wall Street. One London-based banking source said: "It reflects the knowledge of Africa here, plus the time zone".