GERMAN BANK'S DUBLIN OFFICES RAIDED – The International Financial Services Centre offices of a SachsenLB were raided yesterday by gardaí in a investigation into how the German bank nearly collapsed on the back of investments made at its Irish operations.
Sachsen was one of Germany's newest and smallest banks, and one of its former regional banks which was set up to stimulate business investment in Saxony in former East Germany.
It was smashed last year by the credit crunch when it came to light that since 2003 its operations in Dublin had been buying high-risk sub-prime debt, and it ran out of funding.
These funds are now known as toxic debts and are directly related to US home loans that should never have been approved in the first place, and which were packaged up as investment products and sold all over the world. And this was one of the first high-profile credit crunch casualties.
SachsenLB Europe was based in the IFSC here in Dublin, and it bought these debts under names like Georges Quay and Ormond Quay. It managed to build up a €30 billion operation and this was all done off the main bank's books. It is said that deals were so complicated they couldn't even be run through the bank's own risk assessment software.
Interestingly, a report by consultants written in 2005 said risk management in Dublin was 'out-of-date, incomplete, contradictory and unimplemented'. But the report said that the operation here would be fine 'as long as no market disturbances occur'.
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ANGLO TO GIVE UPDATE - Anglo Irish Bank will release an interim management statement this morning. These statements outline to the market, before a company's financial year end, how its doing and what it expects in terms of earnings, and they usually give some kind of update on market conditions.
Going by estimates and analysis from the major stockbrokers this week, earnings per share growth of between 13% and 15% is expected.
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DROP IN US DEMAND AFFECTS OIL PRICES - Oil steadied above $113 dollars a barrel overnight having fallen to its lowest level since May 2 after official data showed US oil use was the lowest in 26 years.
The euro is trading at $1.4937 and £0.7873.
