GREECE AND IRISH AND INTERNATIONAL BANKS REMAIN IN FOCUS - Another ratings agency has downgraded Greek debt, with Moody's blaming the downgrade on 'considerable uncertainty surrounding the timing and impact' of its giant Spring bail-out package. Elsewhere, the governor of the Central Bank, Patrick Honohan, is to appear before the Oireachtas Joint Committee on Finance and the Public Service this morning to discuss his report on the preliminary investigation into the origins of the crisis in the banking system. And, the German Chancellor Angela Merkel and French President Nicolas Sarkozy have renewed calls for a global bank levy and a financial transaction tax. All these people and events are connected as the issues they are addressing would not exist without the global financial crisis, and a lack of regulatory oversight.
John Finn, of Treasury Solutions, says the impact of the Greek downgrade will not have a major impact on the markets as the move was not totally unexpected. He points out that the ECB is the only one buying Greek bonds at the moment. On the Irish banking reports, published last week, Mr Finn says that they clearly show that corporate governance and risk management were not taken seriously in this country.
The consultant says that when John Trethowan's Credit Review Group was first set up, he said that while he welcomed the move, he believed it did not go far enough in sorting out the lack of credit available for small and medium sized firms. But he says he remains hopeful that it will eventually lead to a surge in lending to SMEs.
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MORNING BRIEFS - Six weeks after Standard and Poor's cut it to 'junk' status, the ratings agency Moody's has cut its rating on Greek debt by four notches to Ba1, a rating that the firm says reflects 'questionable' credit quality. The decision will not immediately hurt Greece though, because it has not been borrowing in the open market because of its bail-out. Meanwhile, China is eyeing investments valued at several billion euro in Greek shipping, logistics and airport projects. These will be discussed during the second visit to Athens in four weeks by a high-ranking Beijing official.
*** German Chancellor Angela Merkel and French President Nicolas Sarkozy have renewed calls for a global bank levy and a financial transaction tax. The two leaders said they would call for the measures in a joint letter to the president of the G20 ahead of a summit later this month. G20 finance ministers, at an earlier meeting, had distanced themselves from bank taxes. The idea is that it would protect taxpayers from having to bail-out banks in the future. Proceeds from the taxes would go into a fund that could be accessed during any future financial crises.
*** The governor of the Central Bank, Patrick Honohan, is to appear before the Oireachtas Joint Committee on Finance and the Public Service later this morning. He is there to discuss his report on the preliminary investigation into the origins of the crisis in the banking system. The committee's chairman, Michael Ahern, said the meeting is to provide members of the committee with an opportunity to raise issues they have in relation to the enquiry into the crisis and to help them understand what happened in the banking system.
*** On the currency markets the euro is trading at $1.2213 cents and 82.79 pence sterling.
