Ireland

Ireland's credit unions may need to be significantly restructured if arrears continue to rise and lending opportunities remain subdued, the official in charge of regulating the industry warned on Monday, Reuters reported. Some of Ireland's credit unions -- community-based savings and lending clubs owned by their members -- lent aggressively during the go-go years of the "Celtic Tiger" economy and are now struggling during a severe downturn.

Ireland's commercial-property bust has knocked the country's banks to their knees. Now the lenders are bracing for another blow: losses on home loans, The Wall Street Journal reported. So far, residential mortgages haven't been nearly as big a problem for Irish banks as their portfolios of loans to finance real-estate development and construction projects. Those ill-fated property loans have saddled the banks with tens of billions of euros in losses, forcing the government to mount a series of costly bailouts that have pushed Ireland to the brink of insolvency.

The High Court has ordered the liquidator appointed to building contractor Pierse to investigate the group’s activities over the last 18 months, following concerns raised by a number of its creditors, The Irish Times reported. Mr Justice Peter Kelly appointed Simon Coyle of Mazaars as liquidator to Pierse Contracting and Pierse Building Services after the two companies unexpectedly withdrew their petition for the High Court’s protection from their creditors. CF Structures, to which Pierse owes €5.7 million, and a number of other unsecured creditors, proposed Mr Coyle’s appointment.

Aer Arann’s future was secured yesterday after Ms Justice Mary Finlay Geoghegan agreed in principle to approve a modified scheme of arrangement put forward by the airline’s examiner, The Irish Times reported. This followed an 11th-hour deal between the Revenue Commissioners and Stobart, a British transport and logistics group that proposes to inject €2.5 million into Aer Arann. The Revenue Commissioners will now receive €436,000 that it is owed as a super-preferential creditor within 19 months.

Nama loaned an extra €47 million to developers earlier this year, even though many were not repaying debts they already owed the asset management agency, The Irish Times reported. In the first six months of this year, Nama paid five Irish banks a total of €8.4 billion to acquire property loans with a nominal value of €16.4 billion. Figures for the second quarter, released yesterday, show of the 1,190 debts it acquired, 887 were “non-performing”, meaning the developers who originally borrowed the money were not meeting interest or principal repayments.

The cost of insuring Irish government debt against the risk of default hit a record as investors continued to fret about the cost of bailing out the country's banks, Dow Jones Daily Bankruptcy Review reported. Insurance costs for other highly indebted euro-zone debt also rose amid ongoing worries about government finances. Insurance on $10 million of Irish debt, as measured by five-year credit default swaps, rose $27,000 to $525,000 a year, according to data provider Markit. One trader said Allied Irish Banks PLC's statement that the disposal of its U.K.

Property investor Paddy McKillen has lost his Commercial Court action to prevent the transfer of some €2.1 billion of his loans to the National Asset Management Agency (Nama), The Irish Times reported. Nama had argued the size of the loan portfolio represented a “systemic risk” to the Irish financial system, justifying acquisition in the national interest. The case represented the first major challenge to the manner in which Nama operates.

Ireland's central bank proposed on Thursday stricter requirements for how financial services firms deal with customers as part of efforts to beef up consumer protection in the aftermath of a disastrous property crash, Reuters reported. Years of reckless lending brought Ireland's banks to the brink of collapse and have left many borrowers struggling to repay hefty mortgages. The Central Bank of Ireland wants lending practices tightened to prevent a repeat of the banking crisis.

The future of DVD rental chain Chartbusters hangs in the balance just 18 months after the High Court approved a rescue plan for the troubled company, The Irish Times reported. The company is understood to be preparing to appoint a liquidator to wind up the business, which operates about 20 stores and employs an estimated 170 full- and part-time staff in the Republic. Chartbusters began as a DVD rental outfit in the early 1990s, but branched into internet kiosks and tanning booths as competition put this business under pressure over the last decade.

Ireland's embattled Prime Minister Brian Cowen admitted Wednesday that accelerating €15 billion ($20.78 billion) in planned budget cuts will damp economic growth, but warned the country runs the risk of "not being able to borrow at all" if the steps aren't taken, The Wall Street Journal reported. Ireland's reputation has taken a battering on international markets amid doubts about its ability to bring its deficit, the highest in Europe, back under control. Record-high borrowing costs have forced the government to cancel the two remaining bond auctions planned this year.