10 MAJOR US BANKS NEED MORE FUNDS - The results from the stress tests on 19 US banks show that ten of them will they need $74.6 billion of extra funds to boost their cash reserves. A good few of them are saying they will raise the money themselves, through asset sales, and will not be relying on loans from the US Government. Bank of America is the most at risk, needing an additional $33.9 billion. The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy. The report says none of the banks tested face the threat of insolvency.
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ULSTER BANK PUTTING ASIDE MORE FOR BAD DEBTS - The extent of the bad loans in the Irish banking system is evident in figures just released by Royal Bank of Scotland, which owns Ulster Bank here. RBS today announced losses of £857m sterling for the first three months of 2009. It also announced bad debt charges of £2.9 billion pounds. Ulster Bank's figures are included in a section dealing with regional markets for Europe and Middle East, but we can take it that much of the £220m or so it is setting aside as bad loans for this division relates to Ireland. That figure was just £41m a year ago.
Simon Carswell, Finance Correspondent of the Irish Times, says that while the RBS statement does not have a lot of detail on Ulster Bank's performance, it does confirm a further deterioration in its loan books. Like all other financial institutions, Ulster Bank and RBS are setting aside more money to cover bad debts because of losses on loan books - particularly on development and commercial property investment loans. He says it would be interesting to get a breakdown of that to see if bad debts are increasing on mortgage books. He says that Ulster Bank is covered by the UK bank bailout scheme and is being more prudent in what it expects on its loan books and what levels of loans will go bad in the next few months
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REVENUE COMING AFTER SENIOR BANKERS - Senior bank directors and managers have received letters from the Revenue Commissioners asking whether they have any unpaid taxes to disclose and to confirm their tax affairs are in order. The letters have been sent by Revenue's large cases division which deals with what are known as high net worth individuals. According to the Irish Times, it is part of a general review of tax compliance in banking.
Simon Carswell says the letters are being sent to the bankers' home addresses and the Revenue seems to be carrying out quite a wide trawl to see that all their tax affairs are in order and that any unpaid taxes will be paid. He says the Revenue has not been prescriptive and have not specifically outlined what taxes may be owing or what they may be pursuing the bankers for. However, he adds that it is known that the Government appointed committee which looked into bankers' pay and reported in March found that cash payments had been paid to them to compensate for the cap in private pensions put in place back in 2006.
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MORNING BRIEFS - Smurfit Kappa has reported an 18% decrease in revenues for the first three months of 2009. It said it revenues fell to €1.5 billion from a figure of over €1.8 billion the same time last year.
*** Oil prices struck their highest points in six months yesterday evening before falling back slightly. Prices were lifted by hopes that an economic recovery would boost demand for energy.
*** Ryanair's CEO Michael O'Leary has accused the board of Aer Lingus of lying to its shareholders, to the markets and the stock exchange. He also said the salaries paid to the Aer Lingus board members should be slashed. He said the directors' current pay should be cut from €40,000 to €17,500.
*** The well-endowed women of Britain have won a big victory by forcing Marks and Spencer to charge the same prices for all their bras, regardless of size. A group called Busts 4 Justice had threatened to disrupt the company's annual general meeting in July if it did not get support for its campaign from the retailer. It is reported that Ulrika Johnson and others who used the bigger bras were outraged when they heard about the discrimination. Initially, Marks had stood its ground and insisted that bigger bras contained more material and were more difficult to manufacture. Now, it would appear, their argument is bust.
*** On the currency markets, the euro is trading at $1.34 cents and 89 pence sterling.
