Today in the press

Friday 08 August 2014 08.32
A look at some of today's business stories in the newspapers
A look at some of today's business stories in the newspapers

SHAREHOLDER BACKLASH OVER AER LINGUS PENSION PAYOUT PLAN - Institutional shareholders have criticised Aer Lingus over the proposed €190.7 million cost of settling its long-running dispute with workers over the deficit in the staff pension scheme. The backlash came during an investor roadshow that followed the publication of the airline’s first-half results on July 30th, says the Irish Times. Aer Lingus has about 15 institutional investors and it is understood about two-thirds of them expressed strong reservations about the proposed deal, which is almost €50 million higher than the €140 million once-off settlement flagged by the airline last year. The pension dispute has also cost Aer Lingus €1.9 million in legal and professional fees this year and €10 million from industrial action by workers. The institutions told the company that the so-called staff cost stabilisation measures, which form part of the deal, are not enough to justify such a hefty payment and that there aren’t sufficient guarantees of industrial peace in the future. In addition, they raised concerns about the likely costs of addressing the €167 million deficit in the separate pension scheme for pilots. One institution told Aer Lingus’s executives the settlement was “way too generous” while another highlighted that it represented more than a quarter of the company’s market value. 

***
HOUSE PRICE RISES ARE CAUSE FOR WORRY, SAYS BANKS BOSS - The speed at which house prices are rising is a "concern," the head of KBC Bank Ireland has said. Belgian Wim Verbraeken has also cast doubts on claims that that houses in Dublin in particular are "undervalued." Mr Verbraeken, who took over as chief executive of KBC Bank Ireland in November last year, said a lack of homes available to buy in Dublin in particular is hitting the market, including creating a gap between the number of new home loans approved by the bank and actual number drawn down. The squeeze on supply is seen as the main factor driving up house prices at a pace not seen even during the boom. "When prices increase by 20% I think it is a reason for concern, despite that being from a low base," Mr Verbraeken told the Irish Independent. And he questioned this week's report from the Economic and Social Research Institute (ESRI) that suggested Irish house prices are undervalued. "Any under-valuation in Dublin may be small or non-existent," he said. However, the former Belgian army officer said it is now common for borrowers to have deposits that equal 30-40% of the purchase price of their home. That suggests the bank would be insulated from any new negative equity shock, even if prices fell. KBC Bank will lend up to 90% of the price of a home in urban areas and less in rural districts, Mr Verbraeken said.

***

'SHAMELESS' HSBC SHUTS SYRIAN REFUGEES' BANK ACCOUNTS IN BRITAIN - HSBC has been accused of “shamelessly profiling” its customers by ethnicity after it closed bank accounts belonging to Syrian refugees and students in the UK just days after it was accused of discriminating against Muslim clients. Documents and email correspondence obtained by The Independent in the UK show that HSBC, which styles itself as the “world’s local bank”, sent letters to Syrian clients living in the UK telling them their accounts would be closed and giving them two months to find a new bank. It cited “increased requirements for compliance with international obligations concerning payments to and from sanctioned countries”. The letters claimed that the decision to terminate their accounts was based on the bank’s “own assessment of risk” and did not reflect the manner in which they conducted their business. “We appreciate that you will be disappointed by this decision,” read the letters. “Whilst we don’t expect you to agree with the decision taken, we hope you understand that such decisions are a necessary part of the management and practices by which HSBC chooses to operate its business.”

***

US BANKS TOLD TO STEER BILLIONS TO HARD-HIT AREAS - Big US banks will have to offer billions of dollars more in relief to the communities hardest hit by the financial crisis, as US authorities demand new terms for settling claims of mortgage sales abuses, reports the Financial Times. The Department of Justice and Department of Housing and Urban Development are adding provisions aimed at directing aid to distressed areas and community redevelopment efforts as they resolve outstanding investigations into mortgage sale abuses. The change of focus comes as US officials are moving closer to a record $16 billion-plus deal with Bank of America over mis-selling mortgage securities that would steer as much as $7 billion to homeowners, people familiar with the matter have said. Including the BofA deal, banks will have paid $59 billion in fines and consumer relief since the crisis to settle mortgage cases, according to FT research. At least seven other banks remain under investigation for mis-selling mortgage securities. “We want to focus on lower to moderate income borrowers to make sure we’re getting at the smaller loans. So many years after the crisis there are still so many homeowners that are struggling,” said a DoJ official.

***
 

Keywords: presswatch