Brett’s three-point turn to banking makes sense

Noel Brett's appointment as chief executive of the Irish Banking Federation (IBF) marks a move from road crashes to bank crashes. The Mayo man's appointment has raised a few eyebrows around town. Why would the man who has led the campaign to reduce road deaths to a low of 162 last year want to become a mouthpiece for bankers, whose stock with the public is at an all-time low?

Brett (pictured) had 14 months to run on his second five-year term as head of the Road Safety Authority. It is the way of the public sector that a third term was unlikely to be granted and, in that context, Brett's decision to move on is understandable.

He is also set for a significant step-up in remuneration. His package with the IBF will be worth €200,000- plus and is a permanent role. In 2011, Brett’s remuneration with the RSA totalled €164,370 and the recent Haddington Road agreement on public sector pay would have reduced that by up to 10 per cent.

Minister for Transport Leo Varadkar yesterday described him as an “excellent” RSA chief executive and lauded him for the “crucial role” he played in implementing various road safety measures that had the effect of getting the number of deaths down to a new low since records began.

The skills he has applied with the RSA and in his previous career with the Western Health Board and with local authorities in the UK, should stand him in good stead with the IBF, as he interacts with the Central Bank of Ireland and European regulators, the IMF-EU-ECB troika and the Department of Finance.

This so-called stakeholder engagement will be crucial as he deals with issues such as mortgage arrears, the availability of credit and regulatory changes. That’s to say nothing of his dealings with member banks who fund the IBF and who will all have their own views on what Brett should be doing.

The IBF membership has been considerably diluted since the crash, with the demise of Bank of Scotland (Ireland), Anglo Irish Bank, EBS and Irish Nationwide, along with a handful of IFSC institutions. Fees have been frozen since 2008. Morale in the sector is low.

An obvious route for Brett to take would be to merge the IBF with the Irish Payments Services Organisation, the representative body for payments in Ireland.

They already share the same building and there is an obvious overlap in membership and the scope of their work.

IBF members will hope that Brett can help them navigate a path back to profitability and restore their battered reputations. It will be a long road.

Happy with Bank of Ireland, Ross sets his sights on Greece
It is safe to presume that the excitement surrounding Bank of Ireland's trip beyond the 20-cent frontier this week was not particularly contagious beyond its post-crash investors.

The thousands who owned shares when the bank was in the double-digit-euro range may, in fact, have preferred to look away as it ticked up to its highest level since May 2011 – their pain must still be raw.

Somebody who may have permitted themselves a small grin is Wilbur Ross (above), the grand-uncle of the next generation of Irish banking.

Ross (75) bought into Bank of Ireland just over two years ago, paying eight to 10 cents a share for his 9.9 per cent stake. That amounted to about €300 million, meaning he is now sitting on a paper profit of roughly the same amount. No wonder he was so keen, in an interview earlier this year, to describe the bank as his best investment of the financial crisis.

It is a classic case of risk and reward, with Ross buying in at what seems to have been a good time and now facing a potentially equally difficult decision on the right timing for an exit.

Last week’s results suggesting the bank’s return to profit are raising flags on many dealing desks, as illustrated by the 20-cent barrier being breached.

For the moment, it seems Uncle Wilbur’s eyes and pockets have been lured elsewhere in Europe, with reports in June suggesting he is ready to invest in Spain.

This week, his sights seem to be extending east, as far as euro zone bad boy Greece. Antonis Samsaras, Greece’s prime minister, was on a three-day trip to the US which involved, among other things, a meeting with 20 top Wall Street finance types.

The group, which discussed Greek investment opportunities, included hedge fund manager John Paulson and representatives from Blackstone and Carlyle. It also included our dear old Uncle Wilbur – and we thought we were the special ones.

Davy's O'Mahony gets moody with Moody's
Donal O'Mahony of stockbroker Davy clearly isn't trying to make any friends at Moody's, with his latest research, A Tale of Two Agencies, firmly arguing that the ratings agency has no good reason for being so out of step with its peers on the Irish sovereign.

O’Mahony focuses on the differences between Moody’s and Standard & Poor’s, with the latter’s rating (BBB+) carrying a positive outlook and the former (Ba1) sticking with a negative outlook since 2011.

With a loudly buzzing bee in his bonnet, the bond analyst argues that the “extraordinary disparity of opinion regarding Ireland’s credit quality is worthy of closer scrutiny”.

He notes that while there are bigger gaps between the agencies on other countries (five notches on their ratings for Greece, four on Slovenia), the “dramatic” difference in outlook between them on Ireland is unique. This, the analysis suggests, is based on differing treatments of “risk”, with Moody’s focusing particularly on Ireland’s “susceptibility to event risk”.

An example of this might be a new decline in the housing market, or perhaps a Greek exit from the euro zone, something O’Mahony reckons has substantially faded from the list of our biggest fears.

“As with the case regarding Ireland’s evolving fiscal story, it is difficult not to level the accusation of a ‘rear-view mirror’ Moody’s take on the Irish banks,” the bond analyst says.

O’Mahony’s most complimentary description of Moody’s sees him refer to the agency’s stance as “stoic indifference” in relation to the positive Irish fiscal developments of the past year and a half.

His unwritten views, perhaps discernible by reading between the lines, are presumably considerably less complimentary.