Inside the world of business
Quinn and IBRC row intensifies
The battle between the family of businessman Seán Quinn and the former Anglo Irish Bank, now Irish Bank Resolution Corporation, seems to be raging more intensely outside the courts than in them during the holiday period.
Yesterday, after reporting losses for the first half of the year, chief executive Mike Aynsley said the bank was in “no way, shape or form” being vindictive in pursuing the Quinns in the courts but was doing what it had to recover loans.
He declined to say how much of the €2.88 billion the bank is owed will be recovered from the Quinns.
“We’ve got a long way to go on this and there is very substantial recoveries to come through the IPG [the Quinn family’s international property group] and there are additional credit recoveries to come as well,” said Aynsley.
Asked to respond to the Quinn claim that the bank had wrecked the profitable Quinn Group, Aynsley said the group made a loss of €888 million, including €643 million on Quinn Insurance, in the last full year of Seán Quinn’s reign.
“The Quinns need to just lay off the PR, and get on and focus on purging their contempt and complying with the orders of the courts,” said Aynsley.
The Quinns ignored his advice. In response to his public comments, they said it was “sad and pathetic” that Aynsley was “trying to deflect attention from Anglo’s appalling interim accounts by commenting on the historical performance of the Quinn Group”.
In a personal dig, they said that “Aynsley’s time would be better served justifying the enormous professional fees and salaries being incurred by the bank, not to forget his own salary of over €850,000,” rather than defending the legality of €2.34 billion in loans to support Seán Quinn’s losses on his investment in Anglo
Focus on bank reform to avoid second bailout
The latest targets to be met under the EU-IMF bailout programme, published by the Department of Finance yesterday, pin a lot of hope on further banking reforms if the State is to avoid a second bailout.
The plan attached to the Government’s August 20th letter to the troika says key bank issues to be addressed include financing “the carve out of legacy assets remaining in the banks, especially Permanent TSB, and the promissory notes held by IBRC [formerly Anglo Irish Bank]”.
If these objectives are met, then the Government should be able to access the bond markets again and avert the need to rely on “official financial support”.
The documents say that the restructuring of Permanent TSB and “the timely legal and financial separation” of €12.5 billion of loans housed in asset management from €14.2 billion of good loans hinges on “further sector-wide restructuring measures, the nature, timetable and mechanics of which are yet to be specified”.
This will depend on wider agreement in Europe for another restructuring of the Irish banking sector and a plan for loss-making tracker mortgages.
Meanwhile, over at AIB, the bank has to submit an update of its restructuring plan to the European Commission by the end of September showing how it will “enhance revenue” (raise loan rates, reduce deposit rates), cut operating costs (through job and pay cuts) and restructure operations.
Another target to be met is for an “inter-agency” group led by the department to develop a “road map” by the end of the year to wean the banks off the State guarantee.
A “resolution fund levy” is to be adopted by the end of September to restore the viability and solvency of credit unions, and the Government says preparations are under way to set up a restructuring board for credit unions.
Expect a busy autumn.
NTR investment in Greenstar incinerated
The old saying that where there’s muck, there’s brass certainly didn’t hold true for Irish investment group NTR in relation to its waste management subsidiary Greenstar.
Greenstar’s lenders have called in €83.2 million in loans, thus taking control of the company’s future. Greenstar’s receiver David Carson of Deloitte will now try to find a trade buyer for Ireland’s biggest waste company in an effort to yield the maximum amount for the seven banks.
NTR’s shareholders might not be on the hook for Greenstar’s loans but they’ve seen their 88.45 per cent equity stake in the waste business incinerated.
A €35 million loan to the subsidiary has also gone up in smoke, having been written off by NTR in its latest financial statements for the year to the end of March 2012.
Its strategy to pursue market share in waste via expensive acquisitions was shattered by the downturn and issues around waste policy in this State.
NTR’s overall performance in the recession has been awful.
In the four financial years between April 1st, 2008 and the end of March 2012, NTR racked up aggregate losses of €801 million – most of it related to impairment charges on various assets.
Its share price on the grey market has collapsed from a high of €6.50 in October 2007 to just 25 cent currently. It has halved in the past year alone and the market cap is now just €51.5 million.
There hasn’t been a sniff of a dividend for the past two years.
The heady days of 2007 when NTR was able to post a €1 billion surplus following the sale of its interests in the West-Link toll bridge and energy group Airtricity will be of little comfort to shareholders in the current harsh economic climate.
You can get the latest news each business day at irishtimes.com/businessor by following us on Twitter at twitter.com/IrishTimesBiz. We also have a Facebook page at facebook.com/IrishTimesBizwhere you can read the latest business headlines, blog posts and reader polls.
