TAXPAYERS GET 15% STAKE IN BANK OF IRELAND TODAY - We are a nation of Bank of Ireland shareholders as of this morning. The move means existing shareholders, who have watched their investment almost wiped out in the last month and who are unlikely to see a dividend for the foreseeable future, have now had their percentage stake in the bank reduced. There is the prospect of further dilution in Bank of Ireland's shares with the prospect of a forthcoming rights issue.
The chief executive of the Irish Association of Investment Managers, Frank O'Dwyer, says not a lot has changed regarding the banks as the EU had signalled some time ago that payment of dividends was dependent on it being happy with the banks' restructuring plans. He says the prospect of today's handing over of shares had been factored in. Mr O'Dwyer says the concerns of the institutional shareholders in the banks are still the same - that the EU is satisfied the banks have some understanding of any requirements the Commission around the business plans of the banks in the future.
Mr O'Dwyer says that both the decision of the EU on the banks' restructuring plans and the transfers to NAMA are both fundamental concerns for investors at the moment. He says there are signals coming from the EU that it is close to making its decision - a move that would be welcomed by the shareholders in both banks.
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SMEs SUFFERING FROM CREDIT RATIONING - The rescue of the banks is predicated on getting banks to return to normal lending. Recent official reports show 24% of loan applications from smaller companies are being turned down by the lenders. But in fact that is the thin end of the wedge says UCC's Economics Department, which has just finished research into what it terms credit rationing.
Emily Whelton, the author of the UCC report, says a recent Mazars report found that 24% of small or medium-sized businesses were denied access to credit by banks. Ms Whelton said, however, that this figure rises to 59% for short-term finance and 53% for long-term finances when what she calls 'implicit credit rationing' is taken into account. This is when firms have such a lack of confidence in the banking system that they do not even apply for loans, despite the fact that they do need finance. She says that firms have to work with NAMA, as it is the policy the Government has set in place. However, she says that the funding injected into the banks through the NAMA process would probably not trickle down to small businesses, and what was needed was a return of confidence.
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MORNING BRIEFS - On the currency markets, the euro is worth $1.3630 and 88.1 pence sterling.
