TRANSPORT MINISTER PASCHAL DONOHOE WARNS ON AER LINGUS 'TAKEOVER' - The Government will take "great care and exercise great caution" in weighing up any formal takeover bid that emerges for Aer Lingus by British Airways' owner IAG, Transport Minister Paschal Donohoe told the Dail last night.
Mr Donohoe said the Government, which owns 25.1% of Aer Lingus, will bear in mind the "same issues" it considered when faced with previous takeover bids by Ryanair. Several TDs raised concerns last night in the Dail that any takeover of Aer Lingus by IAG could result in the number of services to London's Heathrow Airport from Ireland being curtailed, writes the Irish Independent. Mr Donohoe said the Government will consider the value placed on the State's stake in Aer Lingus following any formal offer. But he also stressed that if an offer is made by IAG or any other party, policy matters such as competition and connectivity will be "carefully considered before any decision is made on the future of the State's shareholding in Aer Lingus". IAG, which is headed by former Aer Lingus chief executive Willie Walsh, tabled an indicative offer to buy the Irish airline for €2.40 per share, valuing it at just under €1.3 billion. Before Christmas, it offered €2.30 a share. Another bid is widely tipped. The €2.40 indicative offer values the Government's Aer Lingus holding at €321.7m. Ryanair owns 29.8% of Aer Lingus, and has said that it remains open to offers for the stake.
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MORTGAGE LOAN CAP MAY FAVOUR FIRST-TIME BUYER - The Central Bank is examining a special measure to help first-time buyers as it moves to recast contentious mortgage restrictions aimed at damping down the property market. The talks centre on introducing a lower loan-to-value (LTV) limit for first-time buyers than the limit applying to other buyers. It remains unclear whether such measures would be confined to houses and apartments in a certain price range, with bigger deposits required for first-time buyers for loans for more expensive homes, writes the Irish Times. Research suggesting first-time buyers are less likely than second-time buyers to default on a mortgage is under scrutiny as Central Bank officials work to refine the plan. The bank signalled three months ago it would introduce new lending restrictions which could require home buyers to have a deposit of 20% of the purchase price, but there is little prospect of its original proposal remaining intact. A further step to refine the proposal would be to phase in the requirement for a higher deposit. If this approach is taken, a 15% deposit would be required once the plan goes ahead in coming weeks, and the threshold would rise to 20% over three or more years. Such proposals have the support of the Department of Finance, which sought a "graduated" application of loan limits in a submission to the bank.
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DON'T TAKE US FDI FOR GRANTED, SAYS INTEL CHIEF - An increase in R&D spending and a greater focus on improving the talent pool need to be the main focus areas relating to the maintenance of Ireland's competitiveness this year, according to the main representative body for US firms based here. At his unveiling as this year's president of the American Chamber of Commerce Ireland, Intel Ireland general manager, Eamonn Sinnott warned against taking inward US investment for granted, adding that international competition for US foreign spend is "fierce, and growing all the time". "Continued US investment into Ireland is a key contributor to the success of the Irish economy into the future," Mr Sinnott said yesterday, also noting that "Ireland needs to be on top of its game in order to win new business". "The key area of skills and talent will be a top priority for the American Chamber during the year ahead. This is an area where we believe we can help to improve Ireland's offering through closer collaboration with Government and local business in identifying the skills that are needed and ensuring that the right environment is in place to meet the demand," he said. The Irish Examiner also quoted Mr Sinnott as saying that Ireland needs to focus more on R&D spending, as it currently lags behind the EU average.
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TENSIONS SIMMER OVER EURO ZONE QE AS INVESTORS BUY UP SPANISH DEBT - Investors piled into peripheral euro zone debt on Tuesday ahead of the European Central Bank's widely expected launch of large-scale bond purchases even as political resentment mounted over German attempts to water down the programme. Spain made one of its largest ever bond sales at a record low rate, drawing investor orders of close to €23 billion from around the world. Last year, Spain paid close to 4% to borrow money for 10 years: on Tuesday it paid just 1.66%. Expectations that Mario Draghi, the ECB president, will on Thursday launch a programme of quantitative easing have driven up demand for government bonds in the euro zone, pushing yields down to historic lows, and countries in the periphery have moved to take advantage by locking in the low rates, says the Financial Times. The timing of the Spanish sale and the strength of demand were remarkable, said Philip Brown, head of sovereign capital markets at Citigroup, one of the banks involved. "Investors are expecting that the ECB's announcement will be positive for debt issued by peripheral eurozone countries," he said. As investors cheer, politicians and bankers across Europe are expressing mounting frustration over a key concession the ECB is set to make to mollify German opposition. The expected announcement by Mr Draghi, will bring the bank closer into line with the US Federal Reserve and the Bank of England which adopted QE in the wake of the global financial crisis. But QE has split the central bank's 25-strong governing council, with both German members voicing their opposition in recent weeks.
