Ireland

Four times in the past two years, Irish authorities have tried to draw a line under their country's raging banking crisis. Now they are hoping the fifth time is the charm. Ireland's central bank on Thursday is expected to unveil the results of "stress tests" of four major lenders, The Wall Street Journal reported. Analysts expect the exams will show the banks need upward of €20 billion ($28 billion) in additional capital. That is likely to leave the Irish government as majority owner of virtually the entire banking sector.

David Drumm, the former chief executive of Anglo Irish Bank, faces two days of questioning Thursday and Friday in connection with debts claimed by Anglo Irish and his declaration of bankruptcy in Massachusetts, the Irish Times reported. Under a protective order that was demanded by Mr Drumm and his lawyers in exchange for their co-operation, the session will be closed to the press. The order compelling Mr Drumm to appear was filed by Anglo’s lawyers last month and subsequently approved by US bankruptcy judge Frank Bailey, who overruled objections by Mr Drumm’s lawyers.

Shares in Irish Life and Permanent plunged today amid speculation that the Government may be forced to take a large stake in the lender as a result of the severity of this week’s bank stress tests, the Irish Times reported. A banking source confirmed today that IL&P, until now the only domestic lender to avoid a state bailout, will be hit hard by the stress tests, which are homing in on potential losses in Ireland's residential mortgage market. The banking source declined to say how large a stake Dublin may take in the lender.

The Central Bank has resolved that Ireland’s banks will not be able to challenge the findings this week of crunch stress tests, an exercise which will clear the way for the fifth bank bailout since the 2008 guarantee, the Irish Times reported. The participating institutions – Bank of Ireland, Allied Irish Banks, Irish Life Permanent and the Educational Building Society – will not be able to seek any lower loan loss estimates in the tests or revised capital requirements. The tests are expected to show a further capital hole at the lenders of between €18 billion and €23 billion.

Irish first time home buyers are set to lose over €30k if they do not purchase a property before June when mortgage interest relief for people buying their first home is to be abolished, Finfacts reported. Currently mortgage interest relief is available to first time buyers (FTB) for up to 7 years after a property is bought. Over a 7 year period a qualifying first time buyer couple availing of the relief could save over €30k. The changes to mortgage interest relief, also known as Tax Relief at Source (TRS) are outlined in the Programme of Government.

The High Court issued a landmark judgment Friday in relation to the crystallisation of floating charges in the Belgard Motors liquidation, InsolvencyJournal.ie reported. This is the first time that the Irish Courts have determined the issue of the validity of a crystallised floating charge by a Bank. In short, the Official Liquidator, Tom Kavanagh of kavanaghfennell, sought directions from the High Court in relation to whether crystallised floating charges had been converted to fixed charge over assets of circa €2M.

Frank Daly, the chairman of the State's toxic property loans agency, the National Asset Management Agency, has warned that enforcement action is likely to be taken against more of the largest debtors of the agency “as some debtors are making little effort to progress matters and have not yet adapted to the new realities,” Finfacts reported. He confirmed that the NAMA had now completed its review of the business plans of the 30 largest debtors - - accounting for some €27bn of the loans acquired by the agency [approx 40% of total].

The fitness of senior executives and board members at the banks to perform their jobs will be reviewed by the Central Bank as part of sweeping changes to the vetting of bankers at Irish lenders, the Irish Times reported. The head of financial regulation at the Central Bank, Matthew Elderfield, said the review would examine the fitness and probity of all executive and non-executive directors at banks which have received Government support.

New data suggests Germany’s tough stance with Ireland may have its drawbacks — for German banks, the Real Time Brussels blog reported. Irish Prime Minister Enda Kenny clashed at a Brussels summit on Friday with German Chancellor Angela Merkel over her demands to raise Ireland’s low 12.5% corporate tax rate. European diplomats say this showdown is unlikely to end with Germany just giving up. However, another battle could be brewing, which could lead to a different result. Ireland was back in Brussels Monday.

The unemployment rate has been revised sharply upwards in figures released by the Central Statistics Office (CSO) yesterday. In the final quarter of 2010, the seasonally adjusted rate of joblessness was 14.7 per cent, the Irish Times reported. This is more than a full percentage point higher than previously estimated. The unemployment rate was up from the 13.7 per cent recorded three months earlier, according to the Quarterly National Household Survey. This was the largest quarter-on-quarter increase in joblessness in 18 months.