NAMA NI DEBTORS TREATED ‘LESS THAN SYMPATHETICALLY’, MPs TOLD - Former Nama debtors in Northern Ireland are being treated “less than sympathetically” by the US-based investment firm that bought their loans, British MPs have been told, says the Irish Times.
In a major report on the North’s banking, the House of Commons’ Northern Irish Affairs Committee complains about the lack of commercial lending by banks in the North, repeated IT failures and a drive to close rural branches. Northern Ireland property loans held by Nama and worth £3.5 billion to £4 billion (€4.9 billion to €5.6 billion), were sold to Cerberus Capital Management last April “for around £1.3 billion”, a sale described at the time by First Minister Peter Robinson as “excellent news”. Cerberus told MPs it “would be acting in the best interests” of Northern Ireland and, like Nama, would not seek quick fixes by embarking on a “fire sale” that would drive down property prices. “However, since our meeting with Cerberus,” the MPs said, “we have heard disquieting stories from some businesses in NI that they are being treated by Cerberus in a less than sympathetic manner.” Property prices remain “a cause for concern”, the MPs said, adding that the warning from accountancy firm PwC that it could take another decade for prices to return to pre-crash levels made “for sobering reading”.
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HASENSTAB NOT AS LUCKY IN UKRAINE AS IN IRELAND - The US investment guru who reaped around €1.9 billion after correctly forecasting that Ireland would not default during the darkest period of the debt crisis now faces crunch talks over a second massive bet, this time on Ukraine's bonds. The giant Franklin Templeton investment firm is reported to have begun a process to form a bloc of bondholders who will jointly face Ukraine's government in debt negotiations as the war-torn country's debt crisis worsens. Ukraine's government said last Friday that it may inflict so called haircuts on bondholders, the fate Franklin Templeton avoided here, says the Irish Independent. Under "contrarian investor" Michael Hasenstab's direction Franklin Templeton became Ireland's biggest private creditor in 2011 by amassing government bonds cheaply on the markets when other investors were fleeing. Hasenstab reaped almost €2 billion for his investors on the massive Irish punt, buying bonds at a discount when conservative investors were pulling out of the market and seeing values rocket as the economy here bounced back. But, an attempt to repeat the trick in Ukraine ran into serious difficulties as the country has collapsed into revolution and bloody civil war.
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IRELAND TO BE 'TOP EARNER' FROM QUANTITATIVE EASING - Ireland stands to benefit more than any other nation from the ECB’s €1.1 trillion policy of quantitative easing, with hundreds of millions of euro potentially flowing through the economy by next year as a result. The country will be a “top earner” from the ECB plan to kickstart growth in the eurozone, according to MEP and former junior minister Brian Hayes says the Irish Examiner. The QE programme, which began amid much European fanfare last Monday, has already seen the euro fall to 12-year lows against the dollar. With Central Bank profits feeding the exchequer coffers, Mr Hayes said Ireland will reap greater rewards than our European partners as a result of the plan. “The structure of the programme will benefit us more than most. The Central Bank of Ireland will be buying Irish government bonds and the Government will be paying interest on these bonds to the Central Bank,” he said. “The State will benefit from this as most of the Central Bank’s profits are returned directly to the exchequer. This all means that come 2016 when the ECB’s QE programme is in full swing, the State could see hundreds of millions flowing into the economy.” Ireland’s borrowing costs are also at record lows currently, as evidenced by the NTMA’s sale of a 30-year government bond last week.
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TAX INVERSION CURB TURNS TABLE ON US - A crackdown by the Obama administration on “tax inversion” deals, which allowed US companies to slash their tax bills, has had the perverse effect of prompting a sharp increase in foreign takeovers of American groups. In September the US Treasury all but stamped out tax inversions, which enabled a US company to pay less tax by acquiring a rival from a jurisdiction with a lower corporate tax rate, such as Ireland or the UK, and moving the combined group’s domicile to that country. The move was designed to staunch an exodus of US companies and an erosion in tax revenues, but it has left many US groups vulnerable to foreign takeovers. Once a cross-border deal is complete, the combined company can generate big savings by adopting the overseas acquirer’s lower tax rate. Since the crackdown, there have been $156 billion of inbound cross-border US deals announced, compared with $106 billion in the same period last year and $81 billion a year earlier, according to data from Thomson Reuters. By far the biggest acquirers have come from countries with lower tax rates such as Canada and Ireland, which have announced $26 billion and $22 billion of deals respectively, highlighting the competitive advantage that their companies have when it comes to mergers and acquisitions. Before the crackdown, groups from Germany and Japan were the biggest buyers of US companies.
