FURTHER MOVES TOWARDS CREATION OF THIRD BANKING FORCE - The new couple of days sees attention turn to the small lenders with the big problems. Irish Life and Permanent shareholders gather for an extraordinary general meeting this morning in Dublin. They are being asked to create a new holding company which loosens the group up to do something with its troubled bank Permanent TSB. Then tomorrow members of Irish Nationwide and EBS building societies vote to let the Government and its wallet in for a recapitalisation exercise.
The head of research at Dolmen Stockbrokers, Oliver Gilvarry, says the creation of a new holding company at Irish Life and Permanent will enable the company to create flexibility. The group says that with the current restructuring of the whole Irish banking system it needs to be in a position to move quickly. Mr Gilvarry says that at the moment, the banking arm is the holding company which owns the life company. IL&P wants to create a new holding company containing the banking arm, the life company and the asset management area. This will allow it to move a division - most likely the banking arm - into a potential third banking force relatively easily, if the group decides to do that next year. The stockbroker states that IL&P's banking arm is currently holding back the value of its life division.
Meanwhile, the members of the EBS and Nationwide building societies must decide at their EGMs tomorrow to allow the issue of special shares to the Government. Mr Gilvarry says these special investment shares will allow the Finance Minister his stake in the societies, which will resolve some capital concerns for the two lenders. EBS is predicting a capital shortfall of about €300m while Nationwide sees a shortfall of up to €2 billion after their loans are transferred to NAMA.
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MORNING BRIEFS - Easyjet and Ryanair are among the airlines offering 'rescue fares' to former Flyglobespan passengers. Scotland's biggest airline collapsed last night with the loss of 800 jobs. Its claim to fame here was that it was the first airline to bring transatlantic services to Knock Airport in 2007, but the service was later discontinued. While chaos is reported in Scotland, it has to be said that it is the first airline collapse for some months though it is the 16th to suspend flights this year. It was 2008 that was the really bad year when names like Zoom, Silverjet, Oasis, Eos and Maxjet all went to the wall.
*** Aer Lingus management and the pilots union IALPA have concluded their appearance before an Arbitration Tribunal aimed at resolving their dispute over a €97m a year cost cutting programme. It is understood that a recommendation is expected before the end of the year.
*** The US Federal Reserve last night maintained its near-zero interest rate policy and maintained its view that exceptionally low rates are likely to remain in effect 'for what it described as extended period'. The Fed, concluding a two-day policy meeting, maintained key interest rates at between zero and 0.25%. The committee making the decision said there had been some improvement in economic conditions, notably in the troubled labour market, but indicated not enough to shift away from a massive stimulus effort for the economy of our biggest export market.
*** On the currency markets, the euro is worth $1.4406 and 88.82 pence sterling.
