Politics, spin, finance and intrigue

The great thing about life on the ground floor is being able to decide that, if an Irish summer constitutes four days in the …

The great thing about life on the ground floor is being able to decide that, if an Irish summer constitutes four days in the middle of the week, those are the four days in which you down tools and repair to the back garden with a deckchair and a couple of beers.

As a result, when Saturday arrives and the skies are grey you don't feel hard done by. You do, in fact, feel marginally guilty that everyone who has been locked away for the week watching markets slop around (as they tend to do at this time of the year) will spend Saturday cursing and swearing that it had been gorgeous all week and isn't it just typical that the weather turns at the weekend?

But you smother a grin and think that finally life has dealt you a winning hand and you wonder what the temperature will be like in Luxembourg on July 25th.

The reason you wonder this is because July 25th is the next date for the European Investment Bank's (EIB) board of directors to meet and you're idly speculating that if you landed a hot job as vice-president of the bank, you might have to haul yourself out of the garden and back to the office and would it all be worth it?

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It's a little sad to think of the EIB when you're lounging around in the deckchair but it's been in the news so much lately that nobody can avoid it .

It isn't often that financial institutions become such political hot potatoes. Usually financial institutions are news because of the monetary decisions they take rather than because of their staffing arrangements.

A number of people I've been speaking to (from the mobile as I sat under the apple tree) have mixed up the EIB and the ECB. And so some of them were muttering that maybe Hugh O'Flaherty would do a better job than Wim Duisenberg, even though the two banks are completely different and even though the euro has actually risen a little against the rest of the world's major currencies recently, thus allowing Wim to sleep at night for the first time in 18 months.

However, unlike the European Central Bank which is, after all, a recent institution, the European Investment Bank was created by the Treaty of Rome and set up in 1958.

Put simply, its task was to provide funding for the poorer European regions and to assist in the modernisation of European industry.

Currently, its mission statement (all institutions have mission statements these days) is to further the objectives of the European Union by providing long-term finance for specific capital projects. Mainly these would be in the less developed regions - if Ireland hadn't been grant-aided by the EIB our roads would be in a lot worse state than they are now.

It does this by raising money on the capital markets, usually by issuing bonds.

In my bond-dealing days, I used to buy and sell them from time to time, although Irish fund managers were never huge buyers of EIB paper.

The EIB is rated AAA as a borrower. It pays slightly more for borrowing than sovereign governments but somewhat less than equally rated public companies .

Funds that buy EIB paper shove it in the "safe" portfolio. Given its EU credentials, the EIB has been engaged in a lot of borrowing in euros and has created a range of tradable benchmark eurobonds. As far as I recall, it was the EIB which brought the first euro denominated issue to the market back in 1997 when a lot of people were still saying it would never happen. Last year it borrowed around €28 billion (£22 billion). You've got to be comfortable with large sums of money if you get a job in the EIB!

Anyway, with all the palaver about vice-presidential jobs, my mind wandered to the thoughts of the suited EIB bankers borrowing and lending on the international markets. I wondered how many of them actually were career bankers and rose through the ranks of the bank itself?

Of course, the board of directors is made up of finance ministers and, understandably, their knowledge of finance is pragmatic. There is a part of me that pictures the politicians sitting around a highly polished table, looking at the proposals to rebuild some bridges in Kosovo while wondering about their ratings in the polls at home.

Meanwhile, at home our own career bankers are getting slightly worried about their ongoing job prospects too. Central bankers are concerned that talk of handing over many of the Bank's functions to the National Treasury Management Agency (NTMA) (when so many of them have already been handed over to the ECB) will do them out of a job.

Morale is, apparently, quite low in Dame Street. Actually, a central bank is always a difficult place to work.

You spend an awful lot of your time looking at what the commercial banks are doing and then worrying that they're doing too much of it. If you're right, the economy goes into overdrive and you're blamed. If you're wrong, you're a left-wing pinko.

Meanwhile, you don't get nominated to a post in an EU financial institution and you look at the legislation to hand over more powers to the NTMA (which is another State organisation anyway). It was surely bad enough for Central Bankers when the NTMA was given the powers to raise funding, but now the proposal is to establish an investment service, a treasury service and a claims agency within the walls of Treasury Building too.

The proposals were given only a small space in the newspapers but I know that my old friends in fund management, insurance and central banking will be tearing their hair out at the thought of the NTMA getting its fingers in so many more pies.

Jobs for the boys and girls in Grand Canal Street will be offset by losses elsewhere. The treasury service will offer loan and deposit facilities to non-commercial public bodies. I thought Ireland was over-banked as it was!

The NTMA has been one of the best spinned financial stories in the country.

It took over the management of the national debt just as interest rates started their steep decline and has been widely praised for cutting the cost of debt servicing ever since, although if it hadn't that would have been a bigger surprise! It's managed to reap more kudos out of the changing economic environment than anyone (except, perhaps, Peter Bacon), without actually doing anything new.

Politics, spin, finance and intrigue. . . we've definitely hit the summer again.