Inside the world of business
Irish firms are paying big city prices for small town advice
THE ANOMALOUS nature of the Irish legal market was once again highlighted in the Lawyer’s survey of the top 100 European law firms.
The big Irish firms were extremely well represented, despite the Irish economy accounting for something like 1 per cent of the continent’s economic output.
The six firms (Arthur Cox, McCann Fitzgerald, Matheson Ormsby Prentice, AL Goodbody, William Fry, Mason Hayes Curran and Dillon Eustace) managed to extract some €535.1 million in fees out of the Irish market last year – a period in which all the German firms in the survey could manage only €1.498 billion between them.
The top 100 firms in total only managed to trouser something in the region of €8 billion.
The explanation for the “outperformance” of the Irish firms is that the survey does not include the big international firms such as Freshfields, Clifford Chance, etc.
These firms have a very substantial slice of the German and other continental markets, leaving the local firms fighting over the scraps, certainly when it comes to big-ticket corporate deals.
For some reason, these international firms have found it very hard to break into the Irish market, although that seems to be changing with the growth of Eversheds, Maples and Dechert’s practices here.
How the big Irish firms have managed to keep them out while seeming to match them euro for euro when it comes to fees is equally hard to explain.
Personal relationships are one thing, but they don’t fully explain why Irish firms are paying big city prices for small town advice. Fertile ground for a competition lawyer no doubt.
Today
European Central Bank president Mario Draghi speaks after the monthly interest rate-setting meeting of the ECB’s governing council,
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Pay for bankers back on agenda
THE GOVERNMENT is on the horns of a dilemma. It wants to set pay at the banks at a level that is appropriate for institutions in receipt of almost €64 billion in public funds while having the right people to do the best job at repairing those institutions to recover some of that money.
Fianna Fáil finance spokesman Michael McGrath TD has queried bankers’ pay with Minister for Finance Michael Noonan and was told that there are 1,065 bankers at AIB, Permanent TSB and Irish Bank Resolution Corporation, formerly Anglo Irish Bank, earning basic salaries of more than €100,000.
At the biggest of those three fully or effectively nationalised banks, AIB, 861 employees were paid more than €100,000, compared with 143 at IBRC and 61 at Permanent TSB.
At even more elevated pay levels, the Minister said 16 staff at AIB were paid basic salaries of more than €300,000 compared, with nine at IBRC and one at Permanent TSB.
Despite these pay levels, finding the right staff remains a challenge, as seen in IBRC’s search for a new chief risk officer to replace Peter Rossiter, who has been poached by AIB for the same important role that that bank has itself struggled to fill on a permanent basis for almost three years.
Rossiter’s chosen successor is said to have walked when the Department of Finance suggested a lower level of pay than the sum proposed. It seems that the Irish banks must still compete for the same experienced bankers against international institutions that are not constrained with the pay conditions that come with government control.
Quote of the day
Any rational investor could have done what we did in the same open and transparent way
– Svend Egil Larsen, one of two Norwegian day traders cleared of market manipulation after they outwitted the automated trading system of a big US broker
Glass is more than half full for country's agribusiness sector
THE GOOD news just keeps on coming for the Irish food sector. Yesterday saw the publication of results from three very different Irish food bodies, all with strong roots in the dairy sector – Kerry Group, which reported first-quarter results at its annual shareholders’ meeting; the Irish Dairy Board; and Carbery, which presented full-year figures for 2011.
Carbery was perhaps the most interesting. The low-key Cork co-op is beginning to make its name in the lucrative functional foods and sports nutrition business internationally, treading on some of the ground occupied by its behemoth neighbour, Kerry Group.
Last year, Carbery quietly acquired two US flavours companies, significantly strengthening its profile in this area.
But the disappointing performance of the other part of Carbery’s business – cheese – is a cause for concern. This division underperformed last year due to weak markets.
By coincidence, New Zealand’s Fonterra, the world’s largest dairy exporter, said yesterday that whole-milk powder prices dropped again, staying near their lowest level in 2½ years. The Irish Farmers’ Association was quick off the mark, issuing a press release urging Irish co-ops to “adopt a measured response on milk prices” they pay to farmers.
The farming representative body argues that Irish co-ops are far less dependent on basic commodities than they once were, with a significant part of their revenue now coming from “value-added” products, which are less prone to price volatility.
The issue of falling commodity prices, however, is a key challenge for the sector. Milk prices have already softened this year, although stockbroker NCB pointed out in a note yesterday that a repeat of the 2009 scenario – where milk prices plummeted – is unlikely. It also pointed out that Glanbia’s strong nutritionals division helps to protect that company from the impact of falls in commodity prices.
Nonetheless the Irish dairy industry needs to continue its diversification into the nutritionals space, the more added-value side of the industry.
The fact that 15 per cent of Carbery’s workforce is engaged in R D and Kerrygold is continuing to produce new, premium products for the African market are welcome signs that the industry is doing just that.
