GERMANY WILL RESIST ECB RATE PLANS, SAYS EXPERT - Looming expansion of the European Central Bank's campaign to revive the euro zone economy is running into resistance in Germany, raising fresh questions over the limits of the bank's actions.
At the start of a week in which ECB governors meet in Frankfurt to discuss new stimulus measures, a leading German economist told a Dublin audience there should be no further loosening of monetary policy, as steps already taken by the bank presented threats to financial stability, says the Irish Times. Professor Isabel Schnabel, a member of the influential German Council of Economic Experts, warned that negative interest rates curtail the profitability of banks and life insurers. The council, an independent body which advises Berlin on economic policy, is also concerned that negative interest rates encourage excessive risk-taking in pursuit of "relatively small" returns. The biggest danger to financial markets was that interest rates would rise suddenly in a couple of years, said Professor Schnabel, who holds an academic post at the University of Bonn. ECB chief Mario Draghi is widely expected to push the bank's deposit rate deeper into negative territory on Thursday in a bid to encourage lending.
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PROFITS AT DESMOND'S LATVIAN BANK REMAINED FLAT AT €72M LAST YEAR - Profits at Latvia's Reitumu Banka, in which Irish financier Dermot Desmond has a one-third stake, were flat last year at €72m.
Mr Desmond has owned a stake in the bank since 2005 through his Boswell vehicle, says the Irish Independent. He is also a member of the bank's council. He's estimated to have paid about €100m for the stake. Rietumu has committed to paying 50% of its profits out as dividends. The bank said that its interest income hit €99m last year, up from €89.3m a year earlier. Its commission and fee income was €69.1m in 2015, compared to €65.8m in 2014. Chairman Alaxander Pankov described 2015 as a "very successful year" for the bank, with its assets growing by 8.9% to €3.8 billion in the period. He said that despite the low interest environment, the bank has continued to operate efficiently, with a cost-to-income ratio of 31%. Mr Pankov added that although customers spent, on average, less per transaction on their cards during 2015, the volume of transactions per card increased, resulting in a 25% increase in commission expense.
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TEGRAL BUILDING PRODUCTS FIRM BACK IN THE BLACK BUT AWAITS RECOVERY - The managing director of building products firm, Tegral said yesterday the firm will do much better when there is an economic recovery in the regions.
Paddy Kelly was speaking as newly available accounts showed Tegral Building Products returned to profit in 2014 with a pre-tax surplus of €2.78m, writes the Irish Examiner. The firm had recorded a pre-tax loss of €2.25m in 2013. Revenues, for 2014, jumped 36% to €37.14m. However, Mr Kelly said business was “flat” in 2015 compared to 2014 and the “slight” pick-up in trading has only really been seen on the east coast and is yet to spread nationwide. “We are really waiting for a recovery in the regions so we can improve our performance in Ireland,” he said. “We warned the Government about this a year ago when we opened our roofing academy that we needed to do something in the regions - and nobody listened, unfortunately.” he added. The principal activity of the company continues to be the manufacture and sale of roofing, cladding products, profiled metal sheeting and purlins. The increase in 2014 revenues was largely driven by landing a contract with its sister firm in the UK.
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BANK OF ENGLAND FUNDS TO KEEP BANKS GOING IF UK VOTES OUT - The Bank of England is preparing to protect British banks from running out of funds in the event of a Brexit vote by flooding them with a wall of money in the latest sign of the authorities’ nervousness surrounding the EU referendum, says the Financial Times.
The central bank has announced it will give commercial banks three exceptional opportunities just before and after the June 23 poll on Britain’s membership of the EU to borrow as much money as they like to offset any threat of a run on banks and prevent a repeat of the chaos of the financial crisis in 2007 and 2008. Allies of George Osborne, the chancellor, insisted that the BoE liquidity move was “not choreographed” with the Treasury and that the chancellor was unaware the announcement was about to be made. The BoE indicated it was important to announce the decision to hold additional liquidity auctions once the decision had been taken. The contingency plans will nonetheless serve to reinforce Mr Osborne’s claim that a vote to leave could cause serious economic instability and turmoil on the markets. But Tory campaigners for a British EU exit claimed the BoE was being manipulated by Mr Osborne and David Cameron, the prime minister.
