LOW RISK OF NEW BANK BAILOUT BUT TESTS LEAVE PTSB VULNERABLE - Permanent TSB will have to find €170m for every percentage point it falls short of European capital standards after Sunday's ECB stress test results, if it fails the review, says the Irish Independent. "Permanent TSB is the most vulnerable of the Irish banks," according to Emmet Gaffney, an analyst at Investec in Dublin. But he said there is little risk of taxpayers being hit for fresh cash to cover any shortfall, because the bank already has a €400m cushion from taxpayers to help cope with the test results. AIB and Bank of Ireland are regarded as better capitalised - meaning they would be better able to cope with a future shock because of cash already invested into the banks, Mr Gaffney added. Ulster Bank, which is also undergoing the probe, is UK- owned and part of RBS, a much bigger bank, which could shore up its Irish unit, if needed. The stress tests will examine whether lenders across the Euro area are in a position to deal with a shock, by assessing whether a bank would still have 5.5% of capital after a new crisis. Permanent TSB's core tier 1 capital was 13.1% at the start of last year, but slipped to 12.7% at the end of June.
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JUDGE CRITICISES DELAY IN DECISION ON KPMG IN €6 BILLION IBRC ACTION - A High Court judge has strongly criticised the continuing failure over months to make a decision whether accountancy firm KPMG should, in its capacity as former auditors to Irish Nationwide Building Society, be sued as a co-defendant in separate actions by State-owned IBRC against Michael Fingleton and other former directors of the society over €6 billion losses there. Mr Justice Brian McGovern noted the special liquidators of IBRC, Kieran Wallace and Eamonn Richardson, are partners in KPMG, writes the Irish Times. While it was not for him to advise anyone “as to what Chinese walls have to be created”, it was “a matter of concern” there was still no decision on the procedural matter of whether or not KPMG, now a third party in one action, should be a defendant, he said. “How long is it going to take to make a decision?” the judge asked, warning he would not permit the matter “drift” much longer and a decision “cannot be put off for ever”. “I cannot for the life of me understand why someone can’t decide if they (KPMG) are to be a defendant rather than a notice party,” he said. If there was an issue of potential conflict of interest, how much longer does it take for someone to make a decision about that, he also asked.
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IMPAIRED HOME LOANS RISE AT HAVEN - The value of impaired loans at EBS subsidiary Haven Mortgages last year increased by €19m to €238.7m as the firm’s number of repossessions increased fivefold. New accounts show that that the percentage of impaired loans last year increase from 18.8% to 21.7%, or from €209.4m to €238.7m of the firm’s total loan book. Overall, the percentage of Haven Mortgages criticised loans last year increased from 28.4% to 31.1% or from €317.4m to €340.9m. The criticised loans at the end of December last were made up of €238.7m in impaired loans, €36.9m in vulnerable loans, and €65.3m of loans under watch, says the Irish Examiner. According to the accounts filed with the Companies Office “the main drivers of the increases in criticised loans has been the impact of the continuing lack of activity in the property sector and consequent impact on the housing sector, together with increased unemployment and reduced earnings which negatively affected borrowers’ ability to repay loans. The total loan book stood at €1.1 billion. EBS established Haven Mortgages Ltd in late 2007 with the purpose of expanding the EBS’s presence in the intermediary mortgage market. The accounts record that €799.2m of the firm’s loan book was considered satisfactory at the end of last year.
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CARNEY LAUNCHES REVIEW AFTER BANK OF ENGLAND PAYMENT SYSTEM CRASH - Mark Carney, Bank of England governor, has launched an independent review into the worst disruption of Britain’s banking payment system in seven years. The BoE said part of its real-time gross settlement system (RTGS), which underpins large transfers between bank accounts, had been “paused”, after routine maintenance, reports the Financial Times. The breakdown meant the Chaps payment system, which last year processed £277 billion of transactions a day, was down for more than nine hours. The bank was forced to start processing the most important payments manually. Other parts of the RTGS network for smaller transfers, including direct debits, standing orders and the faster payments system, functioned normally. The bank later issued a terse two-sentence statement on Monday afternoon saying it had restarted payments through RTGS as normal. Opening hours for the system were extended until 8pm BST “to maximise the opportunity for settlement”, it added. Mr Carney said the review into the breakdown would cover the causes of the incident, the effectiveness of the bank’s response and the lessons learnt for future contingency plans.
