Ireland

Ireland’s bailout of Anglo Irish Bank, a key factor behind the country’s soaring budget deficit, is “costly but manageable”, the head of th Central Bank said yesterday, The Irish Times reported. Prof Patrick Honohan, who is also part of the European Central Bank’s (ECB) governing council, said the total cost of bailouts of all Ireland’s banks and financial institutions would be around 20 per cent of GDP.

When retail giants Brown Thomas, Clerys and Arnotts flung their doors open on St Stephen's Day last year – traditionally a shop holiday – it was an appropriate end to a terrible year for the retail industry. Sales had hit a 25-year low and an estimated 30,000 jobs were lost. 2010 hasn't been much better for Ireland’s retail sector, InsolvencyJournal.ie reported. Newly constructed shopping centres still stand partially, or even wholly empty, while 'to let' signs litter high streets up and down the country.

Less than a month after stress tests calmed concerns about the health of European banks, new problems in the Irish banking sector are making investors nervous once again, The Wall Street Journal reported. Earlier this week, Ireland received European Commission approval for an additional €10 billion ($13 billion) in capital for state-owned Anglo Irish Bank, on top of the €14.3 billion the government has already injected into the bank. On Wednesday, Bank of Ireland, 36%-owned by the government, reported a pretax first-half loss nearly twice as big as its loss a year earlier.

McInerney Holdings, one of the country's oldest house builders, is fighting for survival this week as it aims to strike a deal which would restructure its €236 million debt pile, InsolvencyJournal.ie reported. The company is the latest in a long line of construction firms to be hit by the slump in property prices and the collapse in construction activity. At latest count, construction firms accounted for one in three insolvencies in Ireland.

The McCormick Macnaughton Caterpillar dealership in the Republic has been taken over by Canadian firm Finning, but the group’s rental businesses have ceased trading, The Irish Times reported. Assets belonging to three rental-related companies in the McCormick Macnaughton group, including three premises, will be sold off at an auction scheduled for September 4th. Management at Finning, the world’s largest Caterpillar dealer, took over the running of the dealership in west Dublin on Monday.

With loan default rates continuing to cause headaches for banks, it seems an increasing number of lenders are dabbling in debt-for-equity swaps as a viable alternative to insolvency, InsolvencyJournal.ie reported. As the downturn continues to bite, and investors as scarce as hen's teeth, there's very little appetite for business assets in Ireland at the moment. Fire-sales can result in lower loan recoveries and because of this, liquidation is often not the best option for banks who wish to recover some of the debts owed to them when companies default on loans.

The number of people seeking employment assistance from the State continued to rise in July, with the Live Register jumping by 8,500 during the month and the unemployment rate rising to 13.7 per cent, its highest in 16 years, The Irish Times reported. The Central Statistics Office said the adjusted Live Register rose to 452,500 last month, with a net figure of about 1,700 more people signing on each week. This brings the unadjusted increase in the year to July to 34,403, a rise of 8 per cent. This compares with the increase of 9 per cent, or 37,420, recorded in June.

Shares in AIB fell sharply on the Dublin market today as the bank reported increased losses in the first half of the year, with bad debts increasing over the period, The Irish Times reported. The bank's stock fell as much as 13 per cent in early trade before regaining some ground to trade 5.6 per cent down at 93 cent by 5pm. The bank recorded a pre-tax loss of just over €2 billion for first half of the year, with its Irish operations posting a €2.3 billion loss before provisions.

Ireland’s Financial Regulator has appointed independent consultants to review Ireland's credit unions in a bid to curtail rising bad debts and mounting losses in the sector, InsolvencyJournal.ie reported. The move comes amid fears about the scale of bad debt in the sector after it was revealed earlier this year that a number of credit unions around the State face serious solvency issues. Last week, the Central Bank and the regulator announced the appointment of Grant Thornton to carry out the large-scale review, which was requested by Minister for Finance, Brian Lenihan.

Cash flow problems remain rife among small businesses as banks continue to restrict credit, according to the Small Firms Association (SFA), The Irish Times reported. The representative group for small business in Ireland has repeated its calls for Government intervention, arguing in its autumn economic statement there is “clearly a market failure” in the provision of loans to small and medium enterprises (SMEs). One-fifth of its members have seen the amount of working capital available to them decrease in the last three months, said the SFA.