Today in the newspapers

Wednesday 26 March 2014 08.52
A look at some of today's business stories in the newspapers
A look at some of today's business stories in the newspapers

EXTRA DAY'S HOLIDAY FOR CENTRAL BANK STAFF AS IT GIVES ITSELF AN 'A' - Staff at the Central Bank of Ireland will get at least one extra day off after the bank gave itself a top grade of over 85% for the third year in a row. Most of its 1,400 staff will get at least one extra day of holidays, which will cost the bank €800,000, writes the Irish Times. The bank gave itself a rating of 88% for its work in 2013, the newspaper has learned, extending its “A grade” winning streak to every year since it introduced a new performance evaluation system in 2010 called a “balance scorecard”. The introduction of performance rating for the bank was brought in during 2010 as the bank reeled in the aftermath of the financial crisis and property bubble. The bank is also now reported to be preparing to bring back bonuses and pay increases as it prepares to move to a new €140 million headquarters in Dublin’s docklands. In a statement the bank confirmed that since the introduction of a balanced scorecard scheme in 2010, it had never achieved a score of less than 85 out of 100. The scorecard is used to measure how well it is implementing the Central Bank’s strategic plan.


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EUROPE'S HANDLING OF CRISIS MADE RECESSION WORSE - DRAGHI - Europe's handling of the financial crisis made the recession worse and longer, Mario Draghi has admitted, says the Irish Examiner. Prompt action by the US to sort out its banks meant the economy there recovered years before Europe, and European leaders actually hurt the economy by leaving banks and states to cope without financial support and by cutting investment in the downturn, the ECB president said in a speech in Paris. In diplomatic but clear language, Mr Draghi said that "policy choices made under the pressure of events and that were commendable by themselves, but that were sequenced in the wrong order, made dealing with the consequences of the debt overhang more difficult." Since June 2012, the euro area has taken "the right sequence of steps", he added. But he highlighted decisions taken before as being in the wrong order. That included the statement in the French resort of Deauville by German Chancellor Angela Merkel and then French President Nicolas Sarkozy that "private sector involvement" or losses, were on the table for bond investors holding euro area government bonds. That 2010 statement is now widely believed to have exacerbated the crisis by driving investors to sell bonds of weaker euro area members.

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BANKS CASH IN ON FEES BUT MANY CUSTOMERS ARE MAKING THE SWITCH - AIB announced the end to free banking in Ireland two years ago, changing the banking landscape and breaking the idea of Irish people being married to their bank, says the Irish Examiner. Although it is hard to quantify how much money banks earn per current account on fees, Simon Moynihan from Bonkers.ie reckons that AIB makes roughly €100 per year, while Bank of Ireland (BoI) is earning an average of €120 per current account. “If you put people under enough pressure they will move. The cost of banking fees is now high enough to force people into changing, it is about €10 a month,” he said. Mr Moynihan said that the most surprising development since the introduction of fees has been the lack of competition to try and lure people away from the AIB to other banks. Only Permanent TSB have introduced a low to no fees bank account. “One of the most interesting developments is that PTSB launched its nearly free current account and a huge number of people switched. Neither AIB nor Bank of Ireland have responded,” he said. To add to that the closure of Danske Bank means that there are thousands of more current accounts up for grabs. Mr Moynihan said that consumers doing their research would opt for PTSB. Permanent TSB has its annual results out today and has confirmed that it opened 40,000 current accounts in the last year alone. 

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BANKS HIT BY $100 BILLION IN US LEGAL SETTLEMENTS SINCE CRISIS - Wall Street banks and their foreign rivals have paid out $100 billion in US legal settlements since the financial crisis, according to Financial Times research, with more than half of the penalties extracted in the past year. The sum reflects a substantial shift in political attitudes towards banks, as regulators and the Obama administration seek to counter perceptions that bankers have got off lightly for their role in the financial crisis. The milestone comes amid signs that banks’ legal costs could rise further, with a number of large banks still under investigation by the task force set up by Barack Obama in 2012 and the political backlash still under way. During stress tests last week, the Federal Reserve found that the biggest banks could still face a further $151 billion bill for operational risk, repurchasing soured mortgage bonds and dealing with the falling value of buildings they own. Lawyers believe the bulk of this estimate is made up of expected litigation costs, suggesting the Fed is concerned that banks have misjudged badly their legal exposure. Last week’s $885m deal between Credit Suisse and the Federal Housing Finance Agency took the settlements to $99.5 billion, of which $15.5 billion came from foreign banks, according to an FT study of 200 fines and restitutions since 2007. Just over $52 billion of the total was paid out in 2013 alone. America’s six big banks - JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs - had combined earnings of $76 billion in 2013, just short of their collective peak in 2006

Keywords: presswatch