Inside the world of business
Thankfully, no sign of any rate-rigging at Irish banks
The Government and regulatory authorities must be breathing a sigh of a relief that there is at least one scandal into which the Irish banks have not been drawn – the rate-rigging scam that has beset the UK bank Barclays and will drag in other major financial institutions.
Being a smaller fish in a bigger pond – and tighter controls – protected the Irish banks from the temptations of the markets.
Barclays was one of 18 banks that contributes daily rates that sets the “Libor” or London inter-bank borrowing rate which sets the pricing on everything from mortgages and student loans to interest rate derivatives around the financial world. This was rigged to benefit the positions of traders elsewhere in the bank. Many of the global institutions in the International Financial Services Centre in Dublin have loans and counterparty deals priced off the Libor rate so they may well be affected by the scandal.
Bank of Ireland and AIB are among more than 40 banks across Europe that set the equivalent rate for the euro area. Both issue a range of inter-bank rates every day covering various maturities from one week up to one year. This is managed within Bank of Ireland global markets division, the bank said, while AIB said the rates are set in its treasury division by a unit that has “a prudential liquidity management mandate, does not have a profit/loss line nor is it responsible for managing interest rate risk on derivative or other interest rate products”.
In other words, the bank’s systems means there is no potential to massage rates for the benefit of others within the bank, as happened at Barclays.
The Central Bank is watching developments in the scandal in the UK but neither its counterpart in Britain or regulators in the US have contacted the Irish authorities about similar rate massaging by any banks in Ireland. That’s one less thing the Irish banking sector has to worry about.
Questions need to be answered over payment of race suppliers
Festivals are as much a part of the Irish summer as rain. Everyone has one, or wants one, because of their perceived benefit to the local and national economies. They bring in visitors, boost hotels, guest houses, restaurants, pubs, etc.
Galway is a past master at them. It has just finished the Volvo Ocean Race, a nine-day shindig. It is gearing up for its arts festival followed by the daddy of them all, race week, which is often a massive boost to the bookmakers, a key part of the economy, and a group which, apparently, could do with a few quid.
However, the ocean race was marred by suppliers’ complaints that they were not paid as promised. A few of those who took part this year said that they had arrears dating back to the first ocean race in 2009.
The organising company, Let’s Do It Galway, pledged that everyone would be paid, and, on Friday, saved itself some embarrassment by paying suppliers, ensuring that at least some did not pull out. The money turned up and the festival was a success, but there are still questions to be asked.
The first is of State tourist body Fáilte Ireland, which provided €4 million in funding. Asked about the difficulties faced by suppliers at the weekend, the agency said it had received no reports of the problems. That was not a satisfactory answer.