BANKS WRITE OFF €300M IN O’BRIEN DEALS - The purchase of three major Irish businesses over the past two years by the billionaire businessman Denis O’Brien involved total bank write-offs of more than €300m, according to The Irish Times.
The deals saw the businessman invest €230m to acquire the Siteserv Group, the Topaz Group and the Beacon Private Hospital.
The Siteserv deal saw the State-owned Irish Bank Resolution Corporation, which is now in liquidation, write off €110m of the €150m it was owed.
Mr O’Brien’s move to become the major shareholder in the Topaz Group earlier this year involved the IBRC writing off slightly more than half of the €304m it was owed.
IRP REIT BUYING MARKER RESIDENCES – The Irish Independent reports that Irish Residential Properties REIT is buying the Marker Residences apartment development complex in Dublin's south docklands for just over €50m.
Brehon Capital and Midwest, which is the seller, acquired the residences and retail development in 2011 as part of the mixed-use complex that includes the award winning Marker Hotel for €30m beside Grand Canal Square.
The building comprises 84 luxury apartments completed to exacting standard in addition to 6 fully occupied commercial units at ground floor level, with car parking provision for 113 spaces at basement level.
Irish Residential Properties REIT is a trust and is listed on the Irish Stock Exchange.
IRISH BANKS NEED MORE CAPITAL, SAYS S&P – Irish banks probably have enough capital not to fail the ECB stress tests, but they do not have sufficient levels to start functioning normally, according to comments from Standard & Poor’s Nigel Greenwood in The Irish Examiner.
The credit ratings agency upgraded the sovereign credit rating to A- from BBB+ with a positive outlook last Friday, but retained a negative outlook on five Irish banks — Bank of Ireland, AIB, Ulster Bank, KBC Ireland and Permanent TSB — during the week.
Irish banks face ECB stress tests later this year as part of the Comprehensive Assessment of the banking system. Mr Greenwood, a director of financial institutions ratings at S&P, who was speaking at a briefing in Dublin yesterday, said that these banks will probably have enough capital to get through the stress tests, but they are well shy of the capital needed to return to robust levels of lending.
S&P estimates that AIB’s risk adjusted capital relative to the size of its assets is 2.4% and Bank of Ireland’s is about 3.7% which is short of the 7% that is considered adequate. Only when the banking system is able to generate profits on a sustainable basis will it be able to generate capital.
STERLING MOVES HIGHER ON CARNEY COMMENTS – The Financial Times reports that sterling was moving closer to five-year highs, after Mark Carney warned households, companies and financial markets to prepare for an interest rate rise, saying the first increase “could happen sooner than markets currently expect”.
In his first hawkish comments since becoming governor of the Bank of England almost a year ago, Mr Carney stressed that the widely anticipated action by the central bank this month to cool the housing market will not be a substitute for gradual interest rate rises.
His comments pushed sterling to $1.6976, while the euro dropped against the pound. The shares of British housebuilding companies and estate agents were falling.
Having last year guided people to expect rates to remain at the emergency level of 0.5% until 2016, financial markets currently expect the first rise in spring 2015 and the governor’s Mansion House speech to a City audience is bound to bring expectations further forward, perhaps towards the end of this year.