What’s in the weekend papers?

23 February 2009

The ‘bad’ bank debate gained momentum in the papers this weekend as the economic and banking meltdowns remain centre-stage. In the wings, retailers and agricultural companies continue to go to the wall while travel agents become the latest victims of the consumer spending downturn.

Economy

Insolvency experts are needed to save the banks, according to a top economist. Economist David McWilliams’ editorial in the Sunday Business Post, My plan to save the country outlines an interesting five-point plan for economic recovery that relies on corporate recovery specialists.

McWilliams’ says the Government needs to: 1. Create a bad bank or “skip”- staffed by insolvency experts - to decontaminate existing banks’ toxic assets. 2. Use the bad bank to purchase toxic assets from the other banks at a deep, deep discount of perhaps only 20% of original price. 3. Fund the bad bank by asking the European Central Bank for a loan of €40 billion at 4% over 10 years. 4. Have existing banks pay the bad bank a fee of 7% over 10 years for cleaning the assets. That way Government makes a profit of 3% of €40 billion a year or €1.2 billion. 5. Fire all the senior management of the banks immediately. www.sbpost.ie

The Sunday Times reports similar plans across the water in RBS to split its operations into ‘good’ and ‘bad’ banks. Ulster Bank’s owner, Royal Bank of Scotland (RBS), is dividing itself in two to cleanse out bad assets. The rescue restructuring of the £28 billion loss making bank is reported to involve cuts of £1 billion a year and a likely loss of 20,000 jobs. The bad bank will exist as a separate entity within the larger bank and its figures will be reported separately. www.sundaytimes.ie

The Irish Times also reported Group of private equity firms in bad bank approach. Senior banking sources told the paper that the Government has been approached by a US and UK consortium that are showing interest in investing in an Irish bad bank. Analysts say the bad bank scenario would only work if the banks are nationalised because it removes the need to appease investors’. www.irishtimes.com

Banks

Anglo Irish Bank
Four from ‘Anglo 10’ unmasked claims The Sunday Times front page this week. The paper says: “Four of the 10-strong assembled by David Drumm, Anglo Irish’s former chief executive, are: Gerry Gannon, Joe O’Reilly, Seamus Ross and Jerry Conlan. Either they or some of their companies now owe several billion to Anglo.”

Gannon is a co-owner of the K-Club and founder of Gannon Homes. O’Reilly is known for developing the €1 billion Dundrum Shopping Centre. Ross runs Menolly Homes and Conlon founded the Mount Carmel Medical Group, says the paper. www.sundaytimes.ie

In related stories, the Sunday Business Post reports:
Anglo 10 in line for €100 million in tax breaks;
Anglo changed terms of directors’ loans;
Quinn’s Anglo losses as high as €2 billion;
IL&P refused Bowler’s resignation;
Fingleton to remain at helm of INBS ‘for the time being’;
Irish Association of Investment Managers to target bankers’share options and
Debt costs soar as investors snub Ireland,
www.sbpost.ie

The Irish Times said Anglo’s top 15 clients each owe in excess of €500 million and Anglo gave long-standing clients €451m in loans to buy 10% of shares. On the opinion page: Customer confidentiality may not apply to the Anglo 10. www.irishtimes.com

In strongly worded editorials, The Sunday Times proclaims: Cronyism still lives, just ask the Anglo 10 and The Financial Regulator no longer adds up, and in a business opinion piece Leave Irish Nationwide to flounder on its own. www.sundaytimes.ie.

The crisis has repercussions on the front line according to Quiet time down at the branch in the Sunday Business Post. “Bank branches approved an average of just over one first-time buyer mortgage per month in the last three months of last year”. The Irish Banking Federation released figures showing that just under 4,000 first time buyer mortgages, worth €895 million, were issued in the last quarter of 2008.

Banks are not the only ones to suffer as Credit unions hit by €284m in bad loans says the Post. www.sbpost.ie

Insolvencies

Firms sink as lifeline falls short, writes The Sunday Times. Examinership is rising but the success rate is down to 30% from nearly 100% during the boom years. Although it is an expensive option many business owners prefer it as it buys them time to restructure, says the paper. Judge Peter Kelly who oversees the commercial court says investors “seem to be as scarce as hen’s teeth” and without them ailing firms in examinership have little chance of survival.

Investment fund case against AED in court reports the Sunday Business Post. A wind-up order has been lodged against AED, a county Meath engineering firm, by CF Investment Managers (CFIM). The investment manager acquired a 65% stake in AED after investing €250,000 in a business expansion scheme. CFIM is managed by top accounting firm Mazars and, in the legal action, the managers claim AED owes it the original investment amount plus the agreed return. The petition is due to be heard today (Monday). If it succeeds the Enterprise Ireland- backed company will have a liquidator appointed. www.sbpost.ie

Company owed €400k by Kendar goes into liquidation says the Sunday Business Post. Welplan (Ireland), an office fit-out company that is being wound-up, is owed €400,000 by Kendar, the company controlled by on-the-run solicitor Michael Lynn. The Stillorgan, Dublin-based Welplan (Ireland) has debts of €1.5 million with €450,000 owing to staff, €220,000 to Revenue and various amounts to Bank of Ireland and other creditors, says the article. Ken Fennell of Kavanagh Fennell has been appointed liquidator.

The paper also reports: Struggling travel agents push for licensing reform. Two travel agents have gone out of business following a significant decline in turnover – estimated at 30% industry-wide, according to the paper. Letterkenny-based Grant Travel, trading as Driftaway Travel, reported a decrease of 67% in 2008. The firm employed 13 staff. No liquidator has been appointed but a creditors’ meeting will take place in six weeks.

Mardan Ltd, trading as Home & Abroad Travel, of Wexford St, Dublin has also collapsed with liabilities, according to accounts filed in October 2007, of €243,634. A senior travel source told the paper that up to 15 further Irish travel agents may pack their bags this year. www.sbpost.ie.

Agriculture

The Sunday Business Post reveals bad times in the agricultural sector in More than 100 jobs at risk at forestry firm. Denber Forestry Services in Kilkenny told creditors it plans to put the firm into liquidation.

Dublin Meath Growers has gone to the wall according to the same paper’s Fruit/ veg co-op wound up with 80 job losses. The co-op, which represents 50 growers, ran into trouble after it failed to keep a key account with Tesco Ireland. The supermarket accounted for 90% of its business.

Retail

The Sunday Business Post reveals the impact on shopping areas in High rents force retailers to the wall. Tenants are seeking rent reductions from their landlords as trading conditions continue to deteriorate. Retails tenants of Royal Hibernian Way wrote to the landlord earlier this month asking for a 50% rent reduction for existing customers for 18 months “to ensure the viability of all members and to avoid further closures in the Mall, which will shortly be only half occupied,” according to the paper.

The articles goes on to say: “Empty shops in towns and shopping centres are becoming increasingly evident, as landlords struggle to fill gaps left by bankrupt retailers.”

In a sidebar story the reporter details how Empty shop units blight retail parks.

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