Speaking to the MacGill Summer School in Glenties last night (see script here), Fine Gael Communications and Energy Spokesman, Leo Varadkar TD, said that the ridiculous concept of Long-Term Economic Value should be abolished with regard to NAMA and the remainder of the loans to be transferred should be bought at market value.

Deputy Varadkar said:

“We are stuck with NAMA but there are certain things we can do to minimise the cost of the bank bailout to the taxpayer, restore public lines and improve credit lines to business.

“To begin with, we can still amend the NAMA process to remove the absurd concept of Long Term Economic Value. Only one-quarter of the loans that will be transferred to NAMA have been transferred. The remainder should be bought at their market value and for nothing more.

“Alongside this, the Government should publish the entirety of the Bacon Report which proposed the establishment of NAMA and all of the independent and other advice that they received at the time. We have a right to know what other options were considered and why they were rejected.

“We also need to ensure that the Banking Inquiry will look into the behaviour of the banks in weeks after the Guarantee was introduced. There is anecdotal evidence that Anglo Irish Bank used the cover of the Guarantee to engage in reckless derivatives trading and foreign currency speculation in a double or quits gamble aimed at minimising their losses. If these stories are true, the abuse of the Guarantee itself may have considerably increased losses at Anglo Irish.

“And the possibility that NAMA will have to be bailed out by the taxpayer also needs to be considered. In October, the Courts will hear Paddy McKillen’s challenge to NAMA. He argues that his companies’ loans are performing and that he should have to go into NAMA. The same case could be made by the 20% or so of developers whose loans are also performing. In the early years of its business plan NAMA will rely on income from these performing loans to cover much of its running costs. If the McKillen case is successful and performing loans are taken out of NAMA, we have to consider the possibility that the state may even have to bailout NAMA itself sometime next year.”

Script of speech delivered below. The Donegal County Council website will soon have an archived video of the debate on their website, available here.
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This evening I will be addressing the Patrick MacGill Summer School session on the Banks, Nama and the Future of the Irish Economy. It is being broadcast online from 8:15pm on the Donegal County Council website, whic can be accessed here.

Other speakers include:

• Mark Fielding CEO, ISME
• Willie Slattery, Head of State Street Corp.
• Shay Cody, incoming Gen, Sec. IMPACT
• Chair: Angela Kerins, CEO Rehab

Oireachtas Business hears final report on lending to business

Leo Varadkar TD, who will be speaking at the Economic & Regulatory Affairs Committee today (Tuesday), has called for the remit of John Trethowen’s Credit Review Office to be extended to existing SME loans and working capital.

“As Fine Gael Spokesman on Enterprise, Trade & Employment, I meet business people almost every day. They tell me that the Government and the banks have got it all wrong. The problem with SME credit isn’t simply about new lending. The real problem is with existing loans, with banks squeezing their customers by increasing interest rates, cutting overdrafts and turning overdrafts into loans.

“John Trethowen’s Credit Review Office is currently reviewing bank lending practices to the small business sector. The CRO currently only hears complaints about unsuccessful applications for new loans.

“The CRO’s remit should now be extended to hear complaints about banks increasing interest rate margins, withholding working capital and squeezing overdrafts.”

Commenting on the latest live register figures, Fine Gael Enterprise, Trade & Employment Spokesman Leo Varadkar TD said: ‘These figures show that unemployment is continuing to rise and now stands at 13.4%, the second highest in the Eurozone. This has trebled since the Fianna Fáil Government was re-elected’.

“The most worrying feature of today’s figures is evidence that more and more people are moving from short-term jobseekers’ benefit to long-term jobseekers’ allowance, as their stamps run out. Overall, the live register has lengthened by 600 but the numbers on jobseekers’ allowance have increased by more than 4,000, to 257,586.

“Put simply, 88,000 people have moved from the short-term unemployment category into long-term unemployment. The social consequences of long-term unemployment are as serious as the economic ones currently paralysing the country. It leads to a loss of hope, destroys communities and causes poverty.

“Yesterday the Government bailed out the banks to the tune of €40 billion. But there has been no bail-out for the unemployed. Indeed, the Government couldn’t even come up with €1 billion to help retain and create jobs, as proposed by Fine Gael.
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Govt pressure vital to make landlords cut rents

Ireland’s small business sector is being decimated by a ‘perfect storm’ of shrinking credit supplies and Government neglect according to Fine Gael Enterprise, Trade & Employment Spokesman Leo Varadkar TD.

Deputy Varadkar was speaking after reports showed that half of all construction jobs have gone, the number of Irish companies going under has by jumped 33% in one month, and credit supplies are getting even tighter.

“Viable businesses are being wiped out, and small and medium enterprises (SME) are the hardest hit. Ireland will not see any economic recovery without a vibrant SME sector. But we are rapidly losing this important resource.

“The Fianna Fáil/Green Government should be doing far more to save viable businesses. This includes:

• A new National Recovery Bank to get lending going again to viable businesses, because NAMA clearly is not working;
• A National Competitiveness Action Plan to bring down costs controlled or regulated by the Government;
• As well as abolishing upward-only rent reviews on new contracts, the Government must also apply pressure on landlords to bring down costs on existing contracts in order to reflect true market value.”

Genuine fears over 2,000+ more Irish jobs with other banks

Fine Gael Enterprise Spokesman Leo Varadkar TD has today (Wednesday) challenged the Government and Financial Regulator to state whether they have had any indication from other international banks operating in Ireland that they are considering withdrawing from the Irish market.

Deputy Varadkar was speaking after former Bank of Ireland CEO Michael Soden raised fears about the future of National Irish Bank, owned by the Danish operation Danske Bank, and ACC Bank, which is owned by Rabo Bank of the Netherlands. This followed the announcement of 760 job losses at Ireland’s Halifax operations, owned by Bank of Scotland (Ireland).

“The loss of 760 jobs in Halifax has sent shockwaves through the financial sector and shattered hopes of a turnaround in Ireland’s unemployment crisis.

“Fine Gael Leader Enda Kenny TD raised Bank of Scotland (Ireland)’s plans to close its Irish retail operation with Brian Cowen in the Dáil today. But the Taoiseach, in an underwhelming response, suggested there has been little or no contact with Bank of Scotland (Ireland) about its Irish retail operation. …[more]

Ireland needs new corporate culture

Addressing the Irish Stock Exchange Conference in Dublin, Fine Gael Enterprise Spokesman Leo Varadkar TD called for a new corporate culture to restore Ireland’s battered reputation overseas. Deputy Varadkar addressed the conference on the issue of corporate governance as an invited panellist.

“The reputational damage that has been done to Ireland by the activities of our banks, Government and State agencies has done real damage to Ireland’s reputation overseas. This damage comes at a cost. It is harder and more expensive for the Government to borrow money from the international capital markets. It is more difficult for Irish companies to secure credit from the banks, capital from investors and export credit insurance. And it is harder for Irish companies to sell their goods and services overseas.

“This reputational damage, however, does not have to be lasting damage. We are not alone. Other countries have endured reputational damage too. But it is up to us to put our house in order, to do it quickly and to show the world that Ireland is second to none when it comes to corporate governance, ethics and open Government.

“Yes, we need new laws. We need to restrict the practice whereby CEOs can graduate from management to become Chairman of the Board as occurred at FÁS and Anglo Irish Bank.
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Fat cats win again

Fat Cats

The fat cats have won again as Brian Cowen announced in the Dáil this morning that he has rubber-stamped the appointment of AIB insider Colm Doherty for the bank’s top job, according to Fine Gael Enterprise Spokesman Leo Varadkar TD.

“This isn’t regime change, it’s business as usual for the banks. Brian Lenihan is working for the banks, not for us. He’s presenting himself as a strong man by defending the salary cap. But he’s giving in on the most important issue: the fact that an insider is getting the top job.

“We were promised a change in corporate culture and proper regulation of the banks. Instead the corporate governance guidelines which were supposed to herald a new era in finance have been abandoned. The CEO and Chairman will be the same person. This is corporate governance at its worst. The fat cats have won again. But this is exactly the sort of ‘success story’ that we have come to expect from Fianna Fáil.

“Mr Doherty was on the board of AIB when it transformed itself into one of Ireland’s most reckless lenders. He was also in charge of the Capital Markets section of AIB which dealt in its own shares and routed money through tax havens in the Pacific and the Caribbean. Mr Doherty, like the rest of AIB’s board from that era, should be long gone by this stage.

“This is further confirmation that Brian Lenihan is the banker’s man in Leinster House.

“The sobering lesson from this experience is that in any showdown between this Government and the banks, it’s the banks that win. The banks have been guaranteed, recapitalised and NAMA’d by Fianna Fáil. With Fianna Fáil in Government, the banks will continue to get an easy ride, but in the process, they are riding roughshod over taxpayers.

“I don’t accept that AIB was unable to find an outside candidate. If Anglo Irish Bank was able to find an outside candidate, AIB should be able to. The bank could at least have advertised the vacancy in the international press.”

Lenihan: the bankers’ man in Leinster House

AIB is giving two fingers to taxpayers and the Fianna Fáil Government by ignoring the €500,000 salary cap for its new boss Colm Doherty and reportedly paying him €633,000, according to Fine Gael Enterprise Spokesman Leo Varadkar TD.

Deputy Varadkar also accused Brian Lenihan of being the bankers’ man in Leinster House by agreeing to almost every demand and request from the banks since the crisis started.

“AIB is giving two fingers to the country: one finger to taxpayers and one finger to the Government. The ink has not even dried on the NAMA legislation and already Ireland’s largest bank is behaving like a law unto itself. The banks are showing that in spite of being bailed out with billions of euros from taxpayers, the fat cats are still putting their own greed ahead of the country’s need.

“AIB’s decision to appoint Mr Doherty as managing director, and for Chairman Dan O’Connor to take on an executive role, is little more than a special purpose vehicle to get around the salary cap. It is also bad corporate governance to combine the executive and Chairman’s roles. This scenario gave rise to problems at Anglo Irish, DCC and FÁS.

“I note that Mr Lenihan claims he has not approved these arrangements. However, he has accommodated every demand from the banks to date, from the bank guarantee onwards. Brian Lenihan is the bankers’ man in Leinster House. He must now refuse the appointment and the salary level.”