GERMANY EXPECTS IRISH TAX REFORM IN RETURN FOR IMF LOAN - Germany has said it expects Ireland to reform its tax system after Berlin backed its request to restructure the Irish EU/IMF loan package - a change which could save the exchequer an estimated €400 million annually. The Bundestag’s quid pro quo demand came as MPs backed Ireland’s request to set aside a provision of its bailout programme requiring EU and IMF loans to be restructured in parallel, writes the Irish Times. German government MPs urged Dublin to use the money saved by the loan adjustment to improve its debt position rather than financing tax cuts. Yesterday’s positive vote in Berlin was a significant step in Ireland’s campaign to repay early €18 billion of its €22.5 billion IMF loan, refinanced by lower interest loans on financial markets, without altering the terms of EU crisis loans. Changing the terms of Ireland’s EU/IMF programme requires unanimity from all EU member states and Bundestag support is a pre-requisite to Berlin agreeing any bailout changes. Support for Ireland’s request came from the governing Christian Democratic Union (CDU), its Bavarian CSU allies, the Social Democratic Party (SPD) coalition partners and, with one abstention, the opposition Green Party. The opposition Left Party voted against the measure.
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NAMA CAN BLOCK DEBTORS RONAN AND QUINLAN FORM BUYING DUNDRUM - NAMA can block debtors such as Johnny Ronan and Derek Quinlan from buying assets by insisting that the agency gets paid in full before any new assets are bought. The Irish Independent understands that NAMA sees itself as first in line for any cash available to debtors whose loans or personal guarantees are held by the agency. It follows a Sunday Independent report that boom era property investors Johnny Ronan and Derek Quinlan are lining up a potential joint bid with international backers for the NAMA loans over Dundrum Town Centre, the €1 billion jewel in NAMA's real estate crown. Both men's loans are in NAMA however, giving the agency the vital say in any such deal, at least until the debts are settled. The agency, which has sweeping powers in relation to the finances of those who owe it money, can insist that developers prioritise debt repayment over any new investments they want to make. In practice it means NAMA can block developers taking direct stakes in new deals. However, the agency cannot block individuals advising third party investors such as major wealth funds or private equity houses. A number of Irish developers who are not in a position to finance their own deals are taking on paid roles as advisors for international funds, lining up deals and working out assets in exchange either for a salary or bonuses based on future profits - a practice known in industry jargon as a "share of the upside."
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IRISH BANKS CONCLUDE ECB STRESS TESTS TALKS - It is believed that the Irish banks have concluded their meetings with the ECB to discuss the comprehensive assessment of the banking system. The heads of AIB, Bank of Ireland, Permanent TSB, Ulster Bank and Merrill Lynch’s Dublin operations were all in Frankfurt over the past few days and held individual meetings which lasted roughly three hours with ECB officials, according to people familiar with the situation. The comprehensive assessment of the banking system consists of an asset quality review and stress tests, which will determine if banks are sufficiently well capitalised to withstand future losses, writes the Irish Examiner. The results of the comprehensive assessment will not be disclosed until the last weekend in October. The purpose of the meetings was to discuss the methodology used for each bank’s stress test and asset quality review. If a bank is unhappy at how certain potential losses were calculated, then there will be a short period of consultation, said a source. They will also get a sense of how well they performed during the tests, but they will not receive any actual results. If a bank fails the comprehensive assessment, then they will be expected to raise fresh capital to plug any shortfall. In the case of AIB and Permanent TSB, which are both state-owned, if they cannot raise capital from private investors, then the Government would have to stump up the funding. None of the banks would comment as this process is subject to strict confidentiality rules.
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BUSINESSMEN ARE ‘SERFS’ IN PUTIN'S RUSSIA, WARNS SERGEI PUGACHEV - A former close associate of Vladimir Putin has said Russian businessmen were all now “serfs” who belonged to the president, with none of the country’s companies beyond his reach. Sergei Pugachev, who was once so close to Mr Putin that he was known as the “Kremlin’s banker”, made the comments in his first interview since the state seized his multibillion-dollar ship building empire in 2012. Speaking to the Financial Times, Mr Pugachev warned that there were no longer any “untouchables” in a Russian business landscape increasingly dominated by Mr Putin. The Russian economy, he argued, had been transformed into a feudal system where businessmen were only nominal owners of their assets. “Today in Russia there is no private property. There are only serfs who belong to Putin,” he said. Mr Pugachev’s comments have fresh resonance amid the ongoing dispossession of another Moscow tycoon, Vladimir Yevtushenkov, whose arrest last month - and a subsequent court decision to seize shares in his Bashneft oil major - is still sending shudders through the country’s business community. That event has been interpreted by many observers as a shattering of the rules that have governed relations between the Kremlin and the country’s oligarchs in the post-Soviet era.
