European Central Bank president Mario Draghi's triple play to revive euro zone growth includes a historic gamble on negative deposit rates, a historically low main interest rate and €400 billion in cheap loans for businesses. But what will it achieve for small and medium enterprises?
John Finn, from Treasury Solutions, says that the European Central Bank will be watching out for a real increase in lending to businesses as a result of its latest measures to stave off deflation and boost the euro zone economy. It will be lending a total of €400 billion at incredibly low rates and will be anxious to see if this will translate into lower borrowing costs for consumers and businesses. Mr Finn says the new measures will mean more reporting duties for euro zone banks as the ECB said it will monitor the rate of new lending. It can recoup some of the new funds from the banks if it is not used in the way it was intended, Mr Finn adds.
The ECB measures could also affect savers as it moved the deposit rates it charges banks to park money with it into negative territory. Mr Finn says there is a danger that banks will cut their own individual deposit interest rates to make up for this. The measure is already receiving "a lot of flack" in Germany where there is a high level of older savers, Mr Finn adds.
MORNING BRIEFS - French bank BNP Paribas is facing a fine of $10 billion from US regulators but according to a report from Reuters this morning it could have been as high as $16 billion. The final figure has not yet been settled but the proposed $10 billion settlement figure has been described as excessive by French foreign minister Laurent Fabius and Jeroen Dijsselbloem, head of the euro group of finance ministers. BNP is charged with facilitating transfers into and out of Sudan and other nations which are the subject of sanctions. Previously the highest fine for breaching such sanctions was $667m on Standard Chartered in 2012.
*** Aer Lingus traffic figures for May show the airline carried 50,000 fewer short haul passengers than in the same month last year. Long haul passenger numbers were up by almost the same figure meaning May numbers overall were flat year-on-year. The figures include the strike affected Bank Holiday Friday which fell on May 30.
*** Netflix Irish users have been warned of a possible scam after a fake emails purporting to be from Netflix and seeking users' credit card details were sent to some users yesterday. IT security firm Smarttech, which uncovered the scam, said as a general rule users should beware of any email that asked for credit card or bank details however genuine they seem.
*** Taoiseach Enda Kenny met senior executives at Apple during his three day trip to San Francisco with tax one of the items on the agenda. Speaking to reporters afterward, the Taoiseach said he discussed "ongoing engagement that Ireland has with the European Commission" on the tax treatment of corporations here in "a general way". Ireland faced criticism by US lawmakers last year over the exploitation of a legal loophole by Apple that allowed it to dramatically reduce the level of tax it pays by using a subsidiary in Ireland that was, legally, not tax resident anywhere in the world. That loophole has been closed but the EU Commission is now considering whether to launch a formal investigation into how Ireland, and other EU countries including the Netherlands, use tax breaks to attract foreign direct investment.