IRISH NATIONWIDE WINS CASE AGAINST BONDHOLDERS IN UK - Irish Nationwide has succeeded in its legal bid to dismiss a lawsuit by two subordinated bondholders in the High Court in London as a judge said he could not stop the Government's plan to share the €5.4 billion cost of the building society, says the Irish Times. The bondholders, Satinland Finance and Trimast Holding, had sought to force a unit of French bank BNP Paribas, the trustee of the bonds, to file a winding up petition against Irish Nationwide to force their repayment in full. The investment funds did not have a valid legal claim, Judge George Mann said in his ruling. The investors took the action after the Government said last September that it expected subordinated bondholders to share in the cost of bailing out the nationalised building society. Irish Nationwide asked the court to dismiss the case, claiming that there had been no default. The bondholders claimed that the Government signalled that it would not repay their loans as they fell due and wanted the society wound up in a bid to be repaid. "They have not established, and will not be able to establish, any ground for the court to intervene," the judge said.
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US TRADERS SHORT-SELL AIB STOCK IN RECORD VOLUMES - Investors are short-selling AIB's US shares in record numbers as the market takes the view the bank will be entirely nationalised soon, writes the Irish Independent. The bank's shares plummeted almost 20% in Dublin yesterday and were down by almost 18% in early New York trading. Message boards and investors' websites in the US are full of comments about the direction of the bank's US shares, known as American depositary receipts (ADRs). The Irish regulator has a ban on shorting Irish bank shares listed in Dublin, but the ban does not cover shares trading on the New York Stock Exchange. Data Explorers, the global firm that tracks short-selling trends, has noted a "very interesting spike'' in AIB's US shares in recent days, with the amount of shares borrowed, most likely for short selling, at 3.7 million. The number of shares on loan has trebled in recent weeks. Short selling is a trading strategy - beloved of hedge funds - where investors can profit from falling stocks. The most common way for an investor to 'short' a stock is to borrow shares in a company and sell them in the market in the hope that the price will fall. The investor can then buy the shares back and return them to their original owners - pocketing the difference as profit. Data Explorers said shorting of European banks was far more common in the US than in Europe now. "We have already detected a trend whereby US investors are more suspicious about the solvency of certain European nations and banks than their closer and more emotionally connected counterparts in Europe.
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FSA'S TURNER OFFERS LITTLE HOPE FOR FIRST-TIME BUYERS - The chairman of the Financial Services Authority, Lord Turner, has hit back at critics who have accused the regulator of creating a "mortgage famine" with tough new rules on lending, especially to first-time buyers, says the London Independent. In an attempt to play down fears about the exposure of the British banks to Ireland, Lord Turner also told the Treasury Select Committee that the banks' exposure to Irish government securities was "not worrying". A bigger danger, he suggested, was the wider threat of a further downturn in the Irish economy, which would restrict profitable lending opportunities and add to bad debts. Ulster Bank, he said, was especially exposed. Warming to his domestic theme, Lord Turner told the MPs that that "easy credit is not necessarily good for first-time buyers" and that enthusiasm for forwarding unaffordable amounts to home buyers during the bubble had created a "clear tail of very harmful lending". However, he added that the FSA would think about the balance between depriving sound borrowers of funding and preventing a repeat of the excesses of the boom. He said that the FSA's Mortgage Market Review was not complete and they would "think very, very carefully" about the consequences of new regulation.
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JPMORGAN READY TO AXE £1.5 BILLION LONDON HQ - JPMorgan Chase is close to axing plans to build a £1.5 billion European headquarters in Canary Wharf, opting instead for the former UK premises of Lehman Brothers, says the Financial Times. The bank's strategy for London has been the subject of intense speculation amid concerns that the abandonment of the 1.9m sq ft Riverside South project would reflect broader industry unease about UK regulatory and tax policy in the wake of the financial crisis. But JPMorgan has sought privately to emphasise the decision would be driven by its business and financial needs rather than the political landscape. JPMorgan's 17,000 UK-based staff are scattered across the City. Moving to the former Lehman tower in the centre of Canary Wharf is a cheaper option than building the sprawling, two-tower Riverside South project on the south-west side of the Docklands financial district. The Lehman office space, at 25 Bank Street, is considered among the best in London, having been purpose-built for the collapsed US investment bank in 2004. The 33-storey building includes large trading floors crucial to JPMorgan's operations and is thought to require minor refurbishment before it could be reoccupied by a bank.
