CENTRAL BANK URGED TO MODIFY PROPOSED MORTGAGE RULES - A key property industry lobby group has urged the Central Bank of Ireland to modify proposed new rules for mortgage lending. In a submission to the regulator.
Property Industry Ireland (PII) has recommended that the new limits be introduced on a graduated basis, writes the Irish Times. PII says a requirement that borrowers should have a 15% deposit before being approved for a home loan would be "more appropriate" than the 20% being proposed by the Central Bank, and should be introduced "over time". Based on a price of €241,000 for a two-bedroom house in Dublin 8, PII has estimated that it would take a married couple of teachers 51 months to save a 20% deposit, 55 months for a couple on the average industrial wage, and 67 months for two staff nurses. It also says that mortgage indemnity insurance provided by third parties should be "explored" as a "parallel tool in protecting banks from future shocks". PII also calls for a credit register to be operational and data published as a "pre-requisite for the introduction of mortgage lending restrictions". At present, the credit register being planned by the Central Bank is not expected to be operational until 2016.
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SETBACK FOR BANKS AS TENDER FOR NEW CREDIT BUREAU GOES OVERSEAS - The Central Bank has chosen Italian credit checker CRIF as the preferred bidder to operate the new central credit register, the Irish Independent understands. Early last week, the Bank chose the Italian company ahead of rivals including the Irish Credit Bureau (ICB). The ICB, owned by the major Irish banks as well as credit card providers and credit unions, is the major credit checking agency in this country but is not backed by the State. The ICB applied for the tender but was notified on December 3 that its bid was unsuccessful. "ICB accepts the decision by the CBI (Central Bank of Ireland) to award the tender to another bidder," an ICB spokesman said. "While ICB notes this outcome the company will continue to provide credit reference services to Irish financial institutions." The government committed to set up a new statutory register under the EU-IMF bailout deal. The register is being set up to give lenders accurate and up-to-date information about borrowers' credit history, and prevent reckless lending. Lenders will be forced to check the register when borrowers seek loans of more than €2,000.
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ADVISORS ON AIB SALE TO BE SELECTED THIS MONTH - It is expected that advisers on the sale of AIB will be appointed before the end of this year. The Department of Finance is in talks with a number of domestic and international firms to advise on the part privatisation of the 99.8% State-owned bank, says the Irish Examiner. The Department of Finance said the selection process was ongoing and there was no current timeframe on when the successful candidates would be picked. However, a person with knowledge of the situation said that Finance Minister Michael Noonan would unveil the advisory team before the Government breaks for Christmas. It is then expected that a package of measures on the restructuring of AIB will be announced following the release of its 2014 full-year results at the end of February. The first task facing the new advisory team will be what to do with the €3.5 billion preference shares held by the Government.
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RESURGENCE OF DOLLAR IS THREAT TO EMERGING MARKET DEBT - Global financial policy makers have sounded the alarm about the impact of a resurgent US dollar on emerging markets, where companies have racked up large debts denominated in the American currency, says the Financial Times. The Bank for International Settlements, known as the central bankers’ bank, warned on Sunday in its Quarterly Review that a prolonged rally in the dollar could expose financial vulnerabilities in emerging markets by damaging some companies’ creditworthiness. The Basel-based organisation added that there were increasing signs of fragility in financial markets, despite renewed hopes for economic growth, pointing to the recent stress in the $12.3 trillion US Treasury market that serves as the bedrock of the global financial system. “To my mind, these events underline the fragility - dare I say growing fragility - hidden beneath the markets’ buoyancy,” said Claudio Borio, the head of the BIS’s monetary and economic department. The main dollar index - measuring the currency versus its biggest trading counterparts - closed at an eight-year high on Friday after a US employment report that showed 321,000 jobs had been created in November. A stronger dollar has historically proved to be a harbinger of turmoil for the developing world, leading to crises in Latin America in the 1980s and Asia in the 1990s. Governments have as a result largely severed their currency pegs to the dollar, weaned themselves off foreign borrowing and bolstered central bank reserves.
