The European Central Bank says its monetary stimulus programme is working. It is spending €60 billion a month buying assets from banks, thus making huge amounts of cash available for lending.
The ECB cites falling borrowing costs for businesses and consumers and rising credit demand as evidence that the plan is delivering.
But John Finn, managing director of Treasury Solutions, says it is a little too early in the process to make a definitive statement on whether the plan is working here. Mr Finn says that SMEs are still struggling on the pricing front and on the availability of finance mainly because they have to give security, which can hold them back quite a lot in terms of being able to borrow at competitive rates. Figures show that banks are making 3.5% profit between the cost of borrowing themselves and then lending this money on, Mr Finn says, adding that this is historically very high and compares to levels of about 1.6% in the period from 2005 to 2008. One would have to go back to the early 1990s to see that level of profitability on mortgages, he adds. So while Irish banks' borrowing costs are slightly higher than some of their European counterparts, the rates at which they are lending is a "hell of a lot" higher - and is down to lack of competition - the analyst states.
Mr Finn says the real gap in the market here is what type of bank, or what type of lending institution we should have. One of the problems during the financial crisis - and not just in Ireland but across the Western world - was that all the banks were quoted companies and these type of companies are there to make profits. He suggests that the country could benefit from a type of co-operative type based product. He says that if the Government decided not to sell Permanent TSB, it could use it as a lever in the market. Mr Noonan said yesterday that the Government can not influence interest rates, but John Finn says if the Government held on to a bank, it could decide to make a 2% rather than a 3% margin on mortgage lending. He says that would force the market rate on mortgage rates down.
MORNING BRIEFS - Companies supported by the 31 Local Enterprise Offices recruited 7,300 new staff last year. When job losses at LEO client companies are taken into account, the net job creation figure last year was 4,000 according to the 2014 annual results for the enterprise offices. Each of the 31 LEOs, a revamped version of what used to be called county enterprise boards, reported net job creation figures last year. In total just under €14.4m was spent on grant assistance for 850 projects by Local Enterprise Office client companies.
*** Carlyle Group is being mentioned as a potential bidder for TV3. Sky News has reported the US investment firm, which has $194 billion under management across over 100 separate funds, has held talks with TV3's owner Doughty Hanson. Private equity firm Doughty Hanson recently abandoned plans to raise a new fund saying instead that it would focus on maximising value from its current investments, which include TV3. That has led to speculation the private equity group may offload the broadcaster.
*** Citigroup, one of the world's largest banks, saw its shares close 2% higher last night as it reported its best quarterly results since the financial crisis. The global bank, which is a significant employer in Ireland, reported net profit of $4.8 billion for the first three months of the year up 20% on the same period in 2014.
*** Wikileaks has republished more than 200,000 documents from Hollywood studio Sony Pictures originally obtained in a hacking attack which the US government has alleged was carried out by North Korean intelligence services. The documents caused acute embarrassment to Sony when originally published last year. They revealed correspondence between Sony executives including, in one case, criticism of US president Barack Obama's taste in films. They also contained commercially sensitive information. The documents were taken down but have now been published in a searchable format by Wikileaks. Its founder Julian Assange said "It is newsworthy and at the centre of a geo-political conflict. It belongs in the public domain. WikiLeaks will ensure it stays there."