Business week: Sacré bleu, the French have done it again
Paris is awarded the coveted European Banking Agency instead of Dublin
Britain’s chancellor of the exchequer Phillip Hammond with his budget at 11 Downing Street in London. Photograph: Neil Hall/EPA
Ireland has suffered its fair share of misfortunes in the aftermath of Brexit. While a number of financial institutions have snubbed Dublin for the allure of Frankfurt of Paris, our sporting ambitions have also been dealt a blow with our failure to secure the Rugby World Cup in 2023.
As if that wasn’t enough, Paris was also awarded the coveted European Banking Agency (EBA) this week. In a decision almost as painful as Thierry Henry’s 2009 handball, the French pulled off a coup after lots were drawn to establish who would host the agency after its Brexit departure from London.
Early on Monday it had looked promising. We had even withdrawn our bid to host the European Medicines Agency to put our sole focus on securing the EBA. By the close of business, Dublin had entered the final round for the EBA against Paris, at 13 votes to 10, and Frankfurt, at four votes, had been eliminated.
“Sacré bleu, we could actually win this thing,” was the consensus of the twitterati on Monday evening. But, in a Eurovision-esque twist, a draw meant both Dublin and Paris would draw lots, and the disappointment that had engulfed the country only five days before when the Rugby World Cup was awarded to the French came flooding back.
Alas, this time we couldn’t blame the Welsh or the Scots, and the Government’s hopes that securing this agency could shore up our appeal for financial institutions fleeing the UK post-Brexit were left unfulfilled.
Britain’s economic woes a serious matter
Whatever about our upset over not securing the 160 jobs that the EBA would have brought, the economic woes across the pond are a more serious matter altogether.
Brexit appears to be starting to bite, and the UK slashed its GDP growth forecast this year from 2 per cent to 1.5 per cent, with predictions that that the economy will continue to slow in the coming years.
The UK’s chancellor of the exchequer, Philip Hammond, allocated an extra £3 billion to prepare for Brexit in his budget, all at a time when the country faces a shortage in healthcare funding and, like the Republic, is witnessing difficulties in its housing market.
So much so, in fact, that Hammond saw fit to abolish stamp duty for first-time buyers on all properties up to £300,000 and for the first £300,000 on properties sold for up to £500,000. This, of course, was criticised by the opposition as a measure that would do no more than inflate house prices.
He also committed a further £44 billion for housing through capital funding, loans and guarantees, and some changes to planning rules to encourage building.
Back on this island, the North got a £650 million boost from the UK treasury which, while welcomed, was considerably less than the allocations to the Welsh and Scottish assemblies.
Key measures to help the North included a commitment to review the impact of VAT and air passenger duty (APD) on tourism. Hammond froze APD on all short-haul passenger flights leaving Northern Ireland.
Most significant, however, was his announcement that the Northern Ireland Executive could have the power to set its own rate of corporation tax to attract “global business and investment”. As to whether that could finally give the Republic’s 12.5 per cent rate a run for its money, well, as the old adage goes, we’ll have to wait and see.
State loses out on money to build social housing
Hardly a week goes by when housing doesn’t feature prominently in the news. This week, while we were spared the usual headlines that prices are rising while rents are spiralling out of control, we were subjected to news that the State has lost out on money to build social housing.
Housing developer Richard Barrett, a former partner in Johnny Ronan’s Treasury Holdings, told a conference on Wednesday that the State lost out on a potential €100 million to build social housing offered to Mr Barrett’s new business because the Government had not approved a system for leasing the homes to councils.
And as if that wasn’t bad enough, he claimed the Government’s estimates of the scale of Ireland’s housing crisis disguise the real picture, because it’s a problem the administration can’t solve on its own. According to the developer, while the official waiting list for social housing in the Republic was 91,000, the actual number of people seeking homes was more than 700,000.
While Ireland’s housing shortage might be music to the ears of developers, one UK bank is understood to be plotting its exit from the Irish mortgage market. Lloyds Banking Group is actively considering the sale of its remaining €5 billion mortgage book, perhaps as early as February.
It is also understood that Deloitte has been hired to manage the sale of the portfolio which, when sold, will end Lloyds’ drawn out retreat from the Irish market having handed back its banking licence in 2010.
Busy week for businesses changing hands
While housing news didn’t feature as prominently as it usually does, there were corporate transactions aplenty this week.
One such move involved the Jurys Inn chain. Swedish hotel group Pandox emerged as the bidder for the business, which could sell for over €900 million.
Meanwhile, Ireland’s biggest hotel, Citywest, will enter the full ownership of real estate investment company Tetrarch Capital. Citywest was acquired out of receivership by Tetrarch and the California-based investment manager Pimco in 2014 for around €30 million. The deal is expected to close by the end of this year, but will first have to be approved by the Competition and Consumer Protection Commission.
Ireland, already renowned for its aircraft leasing successes, will see another company enter the fray in the near term. The Kerry-based financial services group Fexco is backing a new aircraft leasing venture, Airborne Capital, that plans to have $5 billion in assets under management within five years. It’s understood Fexco’s stake in the business will be substantial.
Finally, on the media front, Norah Casey has sold six magazine titles including Irish Tatler and Food & Wine magazine. The sale to Irish Studio, the company behind the US-based Irish Central news site, will see Ms Casey’s brother, Ciaran Casey, leave his position at publishing company Harmonia.