Ireland

The intervention of the European Central Bank this week to buy Italian and Spanish bonds has successfully dragged the two countries’ cost of borrowing to sustainable levels. However the threat posed by contagion in the euro zone’s debt crisis is far from over, with analysts warning yields could rise again to danger levels (generally understood to be 6 per cent rates on 10-year bonds) if the ECB does not continue to buy the debt of both states in the short run before a longer-term solution is agreed, the Irish Times reported.

An Irish academic best known for correctly calling the property crash four years ago has raised fresh concerns over a potential tsunami of debt default from "high rolling" professional classes, the Guardian Irish Business blog reported. Professor Morgan Kelly said there is about €11bn (£9.6bn) tied up in domestic loans that were handed out to lawyers, doctors and estate agents for homes they can no longer afford – loans the banks are not counting as problematic.

Allied Irish Bank Plc chairman David Hodgkinson has proposed a buy-out scheme to help homeowners, who are struggling to meet their mortgage obligations, InsolvencyJournal.ie reported. Speaking at the MacGill Summer School in Glenties, Co. Donegal, Mr. Hodgkinson outlined the plan, which AIB have presented to the Central Bank. Under the scheme, the bank would use capital injected by the government, to buy back the homes of mortgage holders and renting them back to the occupants.

New laws on bankruptcy enacted last week have done little to deter bankruptcy tourism, the Independent reported. Under the old law, bankrupts in Ireland were subjected to at least 12 years of punitive restrictions, and possibly for life and even in death. A bankrupt remained a bankrupt unless discharged by the court. That could only happen if at least a portion of the debt was repaid, along with any costs that may have arisen.

eircom’s new business plan projections leaves little doubt as to what the Irish telecom group’s subordinated debt holders would face in a planned debt restructuring, the Financial Times reported on a Debtwire story. The plan, presented last Friday (29 July) to senior lenders, put the writing on the wall -- over EUR 1bn of debt could be written off, with severe losses for investors in the company’s junior debt tranches.

The number of people signing on the Live Register rose slightly last month, according to new figures from the Central Statistics Office (CSO), the Irish Times reported. The standardised unemployment rate rose by 0.1 per cent to 14.3 per cent in July as an additional 1,500 people signed on to the Live Register. Overall, there were 470,284 people on the Live Register last month, up by 0.7 per cent or 34,600 individuals over the year. This increase is 1.1 per cent less than that recorded in June and 8 per cent lower than in July 2010.

The National Asset Management Agency, which has been tasked with clearing the mountain of bad debt amassed by Ireland's property developers, has launched a firesale of 850 properties including pubs in Somerset, towers blocks in Canary Wharf and golf courses in Ireland, The Guardian reported. The bad bank has just published a full list of properties across the UK and Ireland that are effectively up for sale, having been placed in receivership. It has already been inundated with hundreds of calls from bargain hunters.

McInerney Homes, and a sister Company, McInerney Contracting, has been placed in receivership after the Supreme Court rejected the appeal to a previous High Court decision, InsolvencyJournal.ie reported. The High Court had previously refused to approve a proposed rescue plan, which the Court believed was unfairly skewed against the bank. McInerney Homes was placed into examinership and under High Court protection from their creditors last September. A syndicate of three banks, Anglo Irish Bank, Bank of Ireland, and KBC, are owed €113m by the Company.

Ireland’s Department of Finance has warned the nationalised banks not to expect approval for big payoffs on redundancy deals for staff, the Irish Times reported. The banks were directed to draw up new plans based around pay rates on voluntary redundancy in the public sector and to prepare for a level of job cuts to reflect the sharp reduction in the size of the Irish banking sector.

The National Asset Management Agency (Nama) set aside almost €1.5 billion last year to cover further write-downs on €71 billion of loans it had acquired from five banks, according to its annual report published today, the Irish Times reported. The agency made an operating profit of €305 million for the year, but impairment losses were €1.485 billion for the 12-month period. In the first quarter of 2011, Nama made an operating profit of €91 million.