Cantillon

Time for bailout bankers to cough up cash

As the clamour for former top AIB bankers to repay part of their “super pensions” heats up, attention has shifted to the other banks which have received State bailouts.

Bank of Ireland declined to comment but it’s understood it has no intention of pursuing former executives to forgo part of their pension payments.

The obvious figure of Brian Goggin (right), who was chief executive when the banking crisis hit in 2008, springs to mind. He left the bank in early 2009 and Bank of Ireland’s accounts for that year show that he is entitled to an annual pension payment on retirement of €650,000.

The case for former AIB bankers to pony up some of their pension nest eggs may be stronger given that the bank has cost the State almost €21 billion.

The State has pumped €4.8 billion into Bank of Ireland but the bank has returned more than €2 billion to the Government buying back share-purchase warrants, recapitalisation fees, preference share coupons and guarantee fees.

In comparison, the chances of AIB coming close to this kind of return any time soon are pretty slim.

Action by Irish Bank Resolution Corporation, the former Anglo Irish Bank, which is winding down Irish Nationwide, has already led to the bankruptcy of former chairman Seán FitzPatrick, while former chief executive David Drumm is being pursued by the bank in the US.

Former Irish Nationwide chief Michael Fingleton famously received a pension pot of €27 million from the building society and is the subject of investigations.

Permanent TSB, which has received €4 billion from the State, has said it is in a different position to the other banks as its former executives don’t have the same large pensions as their former peers.

While all the focus is on pensions, there is an obvious case to pursue former bankers for the multimillion-euro bonuses they received during the property bubble, particularly when the loans provided at that time are now inflicting the greatest strain on the public funds.

Irish Water may trickle to Bord na Móna

Bord na Móna may have lost out in the race to run the State’s new utility, Irish Water, but it could still end up playing a role in the venture.

Over two years ago, Bord na Móna, which owns large tracts of the State’s peatlands, launched a plan that involves bringing water from the Shannon basin, from a point to the north of Lough Derg, to a reservoir in Garryhinch, west of Portarlington, from where it could be pumped eastwards.

The water would be used to serve nine counties in the east and midlands, including Dublin, Kildare, Meath, Westmeath and Wicklow, where it is recognised that supplies are under pressure, to the point where shortages are likely in the medium term.

Earlier this week, John Mullins, chief executive of Bord Gáis, the State group the Government chose to establish Irish Water, told an Oireachtas committee that a plan such as this would be necessary to tackle the supply problems that the east and midlands are likely to face.

“Projects such as Bord na Móna’s are going to have to be looked at,” he told the Oireachtas Committee on the Environment, Culture and the Gaeltacht.

He also mentioned he had discussed the matter with his Bord na Móna opposite number, Gabriel D’Arcy, recently. However, he was careful to make it clear that Irish Water would consider all such plans, and not just the one put forward by its fellow State company.

There is debate about the cost of the Garryhinch plan, but in 2010 it was estimated to be €500 million, and it is likely to need the private sector. The scale means it would go straight to An Bord Pleanála under the critical infrastructure planning regime. Planning would also involve the Commission for Energy Regulation, which will oversee the water regime, and probably a Cabinet subcommittee. Plenty of hurdles to clear.

Original thinking from First Derivatives

Trust Brian Conlon’s First Derivatives to turn a profit from property deals during a slump.

The Newry man’s Aim-listed company, which specialises in providing software and consulting services to the capital markets industry, declared a profit of £500,000 from the sale of properties from its portfolio, in its latest interim results.

First Derivatives, which was established in 1986 by Conlon in a spare bedroom, has built up a multimillion pound property portfolio in large financial centres across the world from London to New York.

The company had originally got into the property market to keep its consultants happy – its employees had expressed a preference to staying in serviced apartments rather than moving from one hotel to another.

But in its latest set of half-year results First Derivatives reveals that it sold four properties and intends to dispose of more “when suitable opportunities arise” – perhaps a home from home is not what the consultants need any more.

Its latest set of results shows that during the first six months of the year the Northern Ireland company continued its admirable growth record reporting a 23.3 per cent increase on turnover to £27.6 million and a 9.8 per cent jump in pretax profit to £3.8 million.

The financial crisis has proved to be an opportunity to First Derivatives, which prides itself on being able to “react to market demands”.

Its shareholders will be happy with its cat-like reflexes given that its board has recommended an interim dividend of 3.1 pence per share, an increase of 3.3 per cent, to be paid in time for Christmas. First Derivative, since it floated on Aim in March 2002, delivered year-on-year growth. How many companies can say that these days?

Today

The European Central Bank meets, with the focus likely to be on Greece and the November 16th deadline for the release of the next bailout tranche

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