Minister for Finance states that €7 Billion in Capital provided for AIB / BOI is based on Best Available Information

February 12, 2009


Minister for Finance Brian Lenihan said today the assessment that Bank of Ireland and AIB required €7 billion in capital was based on the best information available. He was responding to claims that the sum may be insufficient. A number of observers reacted to the Government’s recapitalisation plan announced last night by suggesting the move may not mark the end of the State’s intervention in the Irish financial sector.

Davy Stockbrokers analyst Scott Rankin said in a research note today that “investors believe that this will not mark the end of Irish government intervention” and that it is highly likely that the state will have to proceed with a ‘bad bank’/insurance scheme in order to fully deal with this problem”.

“So today’s announcement is very welcome and will give comfort to bond investors and liquidity providers alike, but it may not represent the end of the Government’s efforts to win the battle,” Mr Rankin said.

Mr Lenihan said the Government had examined the loan books of Bank of Ireland and AIB before deciding that each required €3.5 billion. “We have looked at where the exposures are. We have applied to those exposures the negative trends which do apply to the economy and we have come to a conclusion in relation to how much capital is required”, he told RTE’s Morning Ireland .

He described the recapitalisation as a “very good solution to a lot of the problems facing those two particular banks, the Bank of Ireland and the AIB” and added it was equally important not to place too much capital into the banks.

The capital would provide a substantial buffer against future losses and would give them the confidence to lend, Mr Lenihan stated, stressing that the money being injected into these banks would not “be used exclusively to simply protect the banks against future losses”.

The Minister added that one of the preconditions of the recapitalisation was that Bank of Ireland and AIB “come clean about their future losses”.

This morning Bank of Ireland reported a 60% increase in its loan loss provisions over the next three years to €6 billion in an interim management statement.

Bank of Ireland said it expected its loan loss impairment charge for the three years to March 31st, 2011, to hit €4.5 billion, up from a previous estimate of €3.8 billion given in November. The bank also stated that the revised forecast had a downside risk of up to €1.5 billion if economic conditions deteriorate further.

Bank of Ireland also said it expected to make an underlying loss in the second half of its financial year, which ends on March 31st 2009, but for the full-year it said it expected to make an underlying profit due to cost savings.

The Institute of Certified Public Accountants in Ireland (CPA) said the banks supported by the plan needed to immediately start ‘real’ lending to business, and to Small and Medium Enterprises (SME’s) in particular.

Norman J. Adams, CPA president said: “There needs to be clear and decisive action to ensure that money is released and business has immediate access to urgently needed working capital. Freeing up of cash is the single biggest issue facing the economy.”



Broad Political Agreement on retention of key aspects of the National Development Plan

February 12, 2009


On February 6th,  Fine Gael leader Enda Kenny called on the Government to scrap the National Development Plan (NDP), claiming it is filled with “unachievable” political targets.

Speaking the following Saturday 7th February, on RTE, the Taoiseach Brian Cowan, stated that the NDP will not go ahead in all its facets, as it was based on a forecast of 4% economic growth annually. Mr Cowen said that targetted expenditure would see significant investment in higher education and research & development.

He said it would also target efforts to bring business ideas to fruition in order to develop what he called a “smart economy”, and so generate jobs.

Mr Cowen also said that the global economic crisis had shown that membership of the European Union was critical to Ireland’s fortunes and survival.  Mr Cowen also said that people were concerned at how quickly the change in Ireland’s economic fortunes had occurred. He said that in some cases things would get worse before they got better, but stated that Ireland could come through this if the ‘right decisions’ are made now.

In immediate response, on the same day, the Fine Gael Leader Enda Kenny stated that he welcomed the Taoiseach’s admission that there may have to be alternations to the National Development Plan.  Enda Kenny said that the focus of the plan must turn to labour intensive infrastruture projects.

It is unclear exactly what is meant by “labour intensive projects,” but it seems clear that the roads programme is intended to continue without pause or restraint. Just why Ireland needs an enormous roads network radiating out from Dublin instead of connecting existing cities (and their adjacent ports) by an interconnected roads and rail network remains unclear.



AIB & BOI to be recapitalised to the tune of €7 Billion

February 7, 2009


The Taoiseach has stated that  he expects the Government’s recapitalisation of the two main banks will be finalised in the coming days. It is expected that €7 billion will be injected into Allied Irish Bank and Bank of Ireland tin an attempt to stimulate banking activity.

Speaking on RTE radio, Mr Cowen said recapitalising the banks was about promoting external confidence in the Irish economy.


Public Transport Services to be Axed

January 13, 2009


Minister for Transport Noel Dempsey has said Public Transport Services are to be cut back in 2009.

 Hundreds of jobs at Dublin Bus and Bus Éireann are now at risk as management and unions meet in the coming days to discuss the financial situations at both companies.

Dublin Bus has confirmed it will outline the findings of a review it has carried out into financial problems facing the company as a result of the economic downturn and it plans to address these problems to staff and trade unions on Friday the 16th January.

Plans by the government to make cuts on public transport in Ireland have been in the works for some time, with a consultants report recommending massive changes to transport provision.

Routes known to be  “under performing” are to be eliminated. It is expected that Dublin Bus will propose the withdrawal of 10% of the Dublin Bus fleet which would amount to around 120 buses and could result in the loss of up to 200 jobs.

Speaking to RTÉ News, the Minister said that some lessening of public transport services was inevitable given the difficult year companies face. In December the Minister informed Dáil Eireann that there needed to be ‘rationalisation’ within Dublin Bus. Dempsey stated that Dublin Bus was considering a number of options including the reduction in frequency or the complete withdrawal of buses from some routes.

In 2008, the parent company CIE reported a €39.5m operating deficit due a drop in demand for its services and increased fuel costs. The Department of Transport have confirmed that a cost efficiency review of CIE is still under way and the findings are due to be sent to the Minster in the coming weeks.

The harshness with which CIE’s debts are being regarded by the Government is in stark contrast to the latitude being granted the National Roads Authority’s cost overruns, up to €16 Billion in 2008 according to one source.

The Comptroller and Auditor General has previously expressed concern about the huge increases in spending on roads projects.  In 2002 the NRA was summoned before the Public Accounts Committee (PAC), to explain a massive €6.6 billion overrun. By 2004, the overrun had gone up to €10 billion

In 2005, PAC chairman Michael Noonan said the interim report would support Prime Time’s claims (‘The Money Pit’ Monday, 9 May 2005), that 30 road projects originally cost at €6 billion would end up costing the taxpayer €18 billion.

The only alternative to public transport is the Government’s tolled motorway network. There has been no viable explanation as to why Ireland, alone of any country in Western Europe, needs such an expensive road system, to the increasing disadvantage of public transport.



Accident and Emergency Services in the Mid-West are to be Eliminated

January 13, 2009


A Health Services Executive report into hospital services in the Mid-West has recommended that 24-hour A&E services be provided by only one hospital in the region.

The report recommends that full A&E services in the region be retained  at the Mid Western Regional Hospital in Limerick.

It says that 24-hour Accident & Emergency services at Ennis and Nenagh Hospitals are to be replaced by “Local Emergency Centres” and ‘Medical Assessment’ units. The report also stated many patients attending A&E units  can been more appropriately dealt with by a GP out-of-hours service.


Minister Dempsey Turns sod on €200m Gort to Crusheen Road Scheme

December 10, 2008

On Friday, 14 November 2008, Mr Noel Dempsey TD, Minister for Transport formally commenced work on the new N18 Gort to Crusheen road project. This new road scheme, due for completion in 2011, will be just over 23km of dual carriageway in length and will cost €207.5 million to construct.

The dual carraigeway will bypass the town of Gort and the village of Crusheen in County Galway.

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Ex-TD Joe Higgins on the Government’s Bank Guarantee “Scheme”

October 9, 2008

After years of nurturing the property bubble, which allowed the speculators, property developers, and the banks to make mega-profits that saddled hundreds of thousands of working people with huge mortgages, the Fianna Fail/ Green Party government now rewards the institutions responsible for the property crash, with guarantees of up to €500 billion of taxpayers’ funds. 

No such guarantees were given to the 70,000 workers who have lost their jobs, in recent times. Why did the government not step in, to save the 250 jobs at Cappoquin Chickens, or the 320 jobs at Tyco?”


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