Inside the world of business
Kenny a hit with business chiefs
TAOISEACH ENDA Kenny appeared to be in great form when he spoke to the Institute of Directors autumn lunch in the Four Seasons Hotel in Ballsbridge yesterday.
His speech was peppered with references to places he had been to and people he had met over the recent past; evidence perhaps in support of his promise that his would be the hardest-working government in the history of the State.
He had just met Danish employers’ representatives, he told the audience, who were “astonished” by the progress Ireland had made. He was at the Ploughing Championships the day before where he had found the levels of energy to be “palpable”.
He was down at the €300 million Coca Cola plant in Wexford “the other day”. He hadn’t known that you could take 500 types of citrus flavourings and add them to a concentrate that came from Ballina in a way that would have an impact “on five continents around the world”.
He got the biggest laugh of his speech when he said he had also been at the Pfizer plant, enquiring as to what they were doing. “I wasn’t looking for anything,” he added quickly, in a reference to the plant’s production of Viagra.
He had also been on a visit, yesterday, to the new Merc Sharp and Dohme plant in Co Tipperary. Earlier this week he was in the IFSC meeting people there.
He has intentions to fly to Paris and Bonn before the next major meeting of European heads of state. Meanwhile, his Minister for Finance, Michael Noonan, is in Washington, his Minister for Enterprise, Jobs and Innovation, Richard Bruton, is in Carolina, and his Minister for Agriculture, Simon Coveney, is getting ready for an excursion to Algeria (which imports a large amount of Irish cheese).
He also managed a dig at his Fianna Fáil predecessors. “It’s very easy to be in politics if you have a seemingly endless pot of somebody else’s money to dish out. It’s a very different prospect when the coffers are empty and you have to bring your people with you.”
It’s nice to see a man who’s enjoying his job.
Mortgage mayhem and the bonds sold by banks
The carnage in the Irish mortgage market continues. The worst offenders when it came to excessive lending are best seen in figures published by ratings agency Moody’s for arrears levels in a pool of €53 billion in mortgages backing bonds sold by the banks.
While average mortgage arrears of 90 days or more rose to 8.8 per cent in July – up from 7.62 per cent in April and 4.9 per cent in July 2010 – the level of missed repayments at Ulster Bank’s one-time subsidiary First Active (since merged into its main operation) is far higher.
A pool of €3.3 billion in mortgages sold on by First Active as a mortgage-backed bond reported arrears hitting 12.8 per cent in July – up from 8.6 per cent a year earlier.
First Active was one of the busiest 100 per cent home lenders in the Irish market during the boom years as Ulster Bank chased Irish Life and Permanent for the title of Irelands biggest mortgage provider. Irish Life and Permanent’s mortgages in the pool – some €16 billion of loans, or 61 per cent of its Irish residential loan book – examined by Moody’s came after First Active with arrears of 8.94 per cent, up from 4.6 per cent a year earlier. This was followed by €11.9 billion of Ulster Bank mortgages where arrears topped 8.9 per cent – up from 4.8 per cent.
Some €1.7 billion of loans at Bank of Ireland’s ICS Building Society had the lowest level of arrears, with 4.1 per cent having missed repayments for 90 days or more.
It’s hardly a surprise then, based on these figures, that B of I is the only Irish lender to have avoided majority public ownership.
Aer Lingus tight-lipped over leave and return
On Thursday, Aer Lingus reiterated its position that it would not be sharing the details of an external review of its controversial 2008 leave and return redundancy scheme with shareholders.
This message was delivered in a letter by Aer Lingus chairman Colm Barrington to Ryanair chief executive Michael O’Leary.
O’Leary had written to Barrington on September 13th calling for the review, compiled by Deloitte and McCann FitzGerald, to be released to shareholders.
To recap, Aer Lingus agreed to pay the Revenue Commissioners €30 million earlier this year to settle tax liabilities associated with the scheme, which involved workers leaving the company with redundancy payments before rejoining on different terms and conditions.
Cantillon is aware of at least one other shareholder who has written to Aer Lingus seeking a copy of the review but has yet to receive a reply. It remains to be seen if O’Leary will push the matter further.
Aer Lingus says it has accepted and implemented the recommendations and the matter is closed.
Why is it unwilling to publish the findings?
A view has been formed that it was waved through on a nod and a wink by the Department of Enterprise, led by then minister Mary Coughlan, having been brokered by the National Implementation Body, an arm of social partnership whose members included Dermot McCarthy, once the State’s top civil servant.
Might the findings be embarrassing for those parties or for Barrington?
The review might not reflect negatively on any of the above.
It is just that Aer Lingus’s reticence about making the findings public suggests that there might be something to hide.
The best way to put this matter to bed once and for all would surely be to make the findings available to shareholders.
After all, it was their money paid out.
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