How the State got screwed on Dublin Docks

It beggars belief that the State owned the entire controversial Irish Glass Bottle site at Poolbeg, through Dublin Port Company, in 2005. But the following year, after the freehold title was acquired by a subsidiary of the tenant under a loophole in the provisions of the Landlord and Tenant (Ground Rents) No 2 Act 1978, the site was offered for sale by public tender with the State having a 33.3% share of the sale proceeds, not the more typical 50:50 share that had been the custom in instances where long-term commercial leases were being disposed of in a similar context.

The site was sold to a consortium that included Dublin Docklands Development Authority (DDDA) as a 26% shareholder, developers Bernard McNamara and Derek Quinlan in late 2006 for a consideration of €411 million. The State stood to recoup one-third of this (€140 million) but ought to have recouped a further €65.5 million had the customary landlord/tenant 50:50 split applied.

DDDA sought the permission of its supervising minister, Dick Roche to enter the joint venture and to increase its borrowing capacity to €127 million, the maximum allowable under governing legislation; permission to enter a joint venture and indicated on 12 October 2006 that the cost of the proposed transaction in respect of which the loan powers were sought would be €220 million.

Mary Moylan, an Assistant Secretary from the Environment Department, with line responsibility for DDDA, was an Executive Board member who participated in 12 of the 15 board meetings that took place in 2006. Ministerial approval was received on 24 October 2006. Ten days later, on 3 November, the Executive Board of DDDA agreed a tender bid of €411 million but Moylan’s Minister and Secretary-General was not informed of the massive and fundamental change in the terms of engagement.

The assessment of the site value was left to Bernard McNamara, in recognition ‘of his expertise and experience and if he had some additional information which convinced him that the bid should be increased then the Executive Board of DDDA agreed that McNamara could be allowed to increase the bid as he saw fit to a maximum of €437 million’.

A professional valuation of the site was not obtained in advance of determining this bid although one was obtained the day after the decision to submit with an application for loan finance to Anglo Irish Bank, two of whose directors, Lar Bradshaw and Seán FitzPatrick, were members of the 8-person Executive Board of DDDA, Bradshaw was chair of the Executive Board and FitzPatrick was his predecessor in that role.

The stated objectives for the involvement of DDDA in this joint venture was to (1) ensure that the site would be developed imminently (2) expedite the planning process (3) advance its social amenity and less commercially desirable agenda and (4) input to the architectural design and tone of the development.

DDDA operated on the basis of creating a Master Plan for parcels of the 500+ hectares within its jurisdiction. The 2003 iteration of this for the Poolbeg Peninsula had not been completed when this deal was executed in 2006 but they had broad stroke ambitions to have facilities in place for research and development and industrial and commercial usage. The promoters of the joint venture envisaged a return of 15% on their investment. A substantial portion of this would have comprised 1-bedroom apartments overlooking an incinerator and selling for prices up to €1 million each. But no detailed analysis was carried out by the Executive Board or management of DDDA for a proposition that was supposed to have a ceiling of €35 million for DDDA.

The negotiation of funding for this splurge took place with Anglo Irish Bank and Bank of Ireland. Bradshaw and FitzPatrick were both directors of each organisation while another member of the esteemed executive Board, Declan McCourt was a director of Bank of Ireland, as well as being a director of the vehicle importer and distributor, OHM Group. While these three absented themselves from the actual discussion of the funding issue at the board meetings it was Bradshaw who signed the loan guarantees with Anglo Irish Bank.

By 2010 DDDA had a potential exposure of €81.9 million but after a settlement was reached with NAMA, which acquired the lending banks’ loan assets, its actual exposure was €52.1 million.

Some €36.3 million was allocated to site remediation. The value of this 10 hectare site, on which €431 million was spent before taking account of remediation costs, was put at €45 million at the end of 2010.

There has been never been evidence that the scale of this splurge was ever made known to the Minister for the Environment, Community and Local Government and in May 2012 the current Minister, Phil Hogan, announced the shuttering of DDDA. Moylan remains an Assistant Secretary in charge of finance and central services. The five other member of the Executive Board in 2006 were Angela Cavendish from Raglan Road Ballsbridge, a director of Alexsam Limited, Donall Curtin a director of Byrne, Curtin Kelly an accountancy practice, Niamh O’Sullivan from Ranelagh, a director of Arup Consulting Engineers and Joan O’Connor formerly a director of Interactive Project Managers Limited.

Public Outrage at Bank of Ireland extravagant bonuses

Last Saturday I spent a pleasant few hours with fellow hill walkers strolling along the 14KM stretch along the banks of the River Dodder. The controversial topic of Bank of Ireland bonus payments got an airing. These men and women of the world walking with me were aghast at what emerged in a Department of Finance Report on the matter as this Bank gave the Irish public the V sign.

A parliamentary question sought information in November 2010 on bonus payments to staff made by banks since the commencement of the Irish Government guarantee in September 2008. The Bank of Ireland advised the Department of Finance that “no performance-related bonuses were paid with respect to the financial year to March 2009 and December 2009”.

The statement added “a small number of people at middle management level received payments which reflected either guarantees which were agreed on their joining the Group or deferred payments where the historic performance criteria had been achieved and the payment was deferred over several years. For commercial reasons Bank of Ireland do not disclose the amount of such payments. The Bank advises that it had not legal discretion in these matters”

The loss at Bank of Ireland for the 9 months ended 31 December 2009 had risen to €1,813 million compared to €23 million for the year ended 31 March 2008. Impairment charges in this period reached €4,055 million compared to €1,435 in the year ended 31 March 2009. The Irish Government was forced to invest €3.5 billion in preference stock so as to bolster its capital base.

It transpired that the information provided by Bank of Ireland was incorrect and that bonus and quasi bonus payments from September 2008 to December 2010 amounted to a staggering €66.37 million – all linked to performance.

A patina of legal legitimacy is not an indication that any transaction is ethical, moral or affordable.

The hill walkers are utterly mesmerised that Bank of Ireland could be so utterly undermined in the Bank by duplicity, betrayal, self-serving slovenliness and skulduggery. These characteristics are evident not just in grotesque scale of bonus payments, which the Bank (and the public) cannot afford and untruthful answers to parliamentary questions, but there is now also evidence of incomplete and misleading information in the due diligence process prior to the public subscription for shares, in the attempted enhancement of the Group Chief Executives pension terms last year and the tardiness by the Bank in relation to the subsequent impeded and delayed investigation into the November 2010 misrepresentations to Dáil Éireann.

1. These bonuses, especially in the prevailing circumstances, amount to the barefaced looting of society – on a scale commonly seen in Russia, Africa and Asia.
   
2. The explanation that bonuses are ‘open to different interpretations’ and the comment by Arthur Cox that Bank of Ireland “used a restrictive and uncommon interpretation of what constituted a performance bonus” describes a crazy mentality of a type not untypical of occupants of padded cells in a lunatic asylum, whose capacity to communicate in vernacular English is very limited; who have ‘no intention to mislead’ and are likely to recognise this in lucid moments to avoid personal embarrassment.
3. The implication that the Irish people, who have been fleeced of €3.5 billion by Bank of Ireland, can now be bought for €2 million paid by Bank of Ireland to the Exchequer ‘to recognise the difficulties cased by the way the Bank handled the matter’  will simply  create a veneer of indulgence and camouflage to enable them to be further fleeced of, not just €66.37 million, but an additional €21 million in respect of bonuses and commissions in 2011 and other amounts in 2012 is outrageous and abominable.
4. The suggestion that any future parliamentary questions in relation to personnel or other important matters be authorised by the Group Chief Executive beggars belief on grounds of credibility. The Report indicates that overall payments totalling €1.2 million were not disclosed in the due diligence process prior to the public bailout.
5. The Sunday Tribune on 30 January 2011 that the Group Chief Executive of Bank of Ireland directly intervened with the planning authorities in October 2007 in connection with the proposed Sean Dunne development that would have cloned Jurys/Berkeley Court Ballsbridge hotel sites with Calcutta, had it been heeded?

The text of the letter from Richie Boucher to Dublin City Council planning authorities read:

“Dear Sir

Re Jurys / Berkeley Court Site

I refer to the above and write to confirm my strong support for this landmark proposal which I believe will significantly benefit the City of Dublin and its citizens through helping enhance the concept of a living city and providing buildings of significant architectural merit befitting Ireland of the 21^st century. Yours faithfully, Richie Boucher, Chief Executive Retail Financial Services Ireland.”

Dublin City Council granted partial permission for the Ballsbridge development but it disallowed Dunne’s application to build a 37-floor skyscraper.

Are public interest directors effective?

The Court of Directors at Bank of Ireland nominated two non-executive directors to represent the public interest at the behest of the Government following the introduction of the Government guarantee. They are Tom Considine, Secretary-General of the Department of Finance from March 2002 to June 2006 and former Fianna Fáil TD and minister, Joe Walsh.

They were paid €119,000 in the nine months ended 31 December 2009.

The Minister for Finance, Brian Lenihan, advised the Dáil barely a month ago that public interest directors “owe their duties to the company”; that “the interests of the company are paramount”. Public interest directors, he explained, “bring civic mindedness and a sense of what is in the public interest but that, to a great extent, the public interest and the covered institutions interest are likely to coincide”.

What are the consequences when this is not the case? The decision by Bank of Ireland to make outrageously extravagant bonus payments directly contravenes public policy articulated by the Department of Finance and utterly defies the role of society in keeping Bank of Ireland viable.

The Covered Institutions Remuneration Oversight Committee (CIROC) established by the Department of Finance were informed in early 2009 by the covered institutions that they did not intend to pay bonuses in respect of 2008 and CIROC recommended in February 2009 that bonuses should not be payable then, or for the period of the Government guarantee.

The membership of CIROC comprised:

• Vivienne Jupp, a former executive of Accenture Ireland’s Government Operating Group. The Irish Government appointed her a member of the Broadcasting Commission and the Review Body on Higher Remuneration in the Public Sector. She is a member of the Finance Committee of Concern Worldwide and a board member of the Irish Hospice Foundation.
  
• John Purcell former Comptroller and Auditor General
  
• Eddie Sullivan, Secretary-General for Public Service Management and Development. Sullivan served as interim director of FÁS following the Rody Molloy debacle

How can the public interest be adequately served when the duties and obligation to serve the public interest are so ill defined by the Minister and there is apparently no communication to Government when public policy is contravened and the Dáil is blind-sided by inaccurate information provided by Bank of Ireland? What will the consequences be and who will bear them?

How would you cope with an annual pension of €1 million +?

The Irish financial institutions dealt with by the Covered Institutions Remuneration Oversight Committee are those that have obtained financial support from the State since 2008. They include AIB, Bank of Ireland, Anglo Irish Bank, Irish Nationwide Building Society, Irish Life & Permanent and EBS. Postbank Ireland had been included but has subsequently ceased to operate.

This CIROC members were mandated to investigate the remuneration of those in charge of these institutions and to recommend pay ceilings to the Minister for Finance – which they did in February 2009.

One facet of remuneration they investigated was pensions. They noted that cash allowances had been paid to compensate for the effects of the ‘pension cap’ imposed by the Finance Act 2006 and that it was unacceptable that pension schemes should be inconsistent with the intent of relevant legislation. The found that top management made little, or no contribution for their own pensions and that in future an appropriate balance was necessary between employee and employer contributions with the former being increased to achieve this balance. They also recommended that bonus payments should not be pensionable and that pension arrangements for top management should be at least broadly similar to those of the generality of staff of the institution.

The pension arrangements of Michael Fingleton, formerly head bottle-washer at Irish Nationwide Building Society were published by the Public Accounts Committee.

Fingleton accumulated a pension fund for himself at Irish Nationwide with assets of over €29 million when it was wound up in 2007 when Fingleton was 67 years old. A pension insurance policy was established for the benefit of Fingleton and other employees in 1975. This INBS pension scheme was originally set up in 1981, 10 years after Fingelton became connected to it. A second which was to directly benefit Fingleton was established in 1995 with the transfer of accumulated assets of €4.5 million too which a further €3.4 million was added in 2005. Various other enhancements, including serial annual pay increases of the order of 8 – 10%, were made throughout the existence of the scheme including an average of the bonus payments over the previous three years. Investments by the scheme by directed by the beneficiary.

The benefits to be provided to Fingleton include:

• His spouse’s benefit was increased from ⅔ to 100% of his pension entitlement
• The final salary, for pension purposes, was to have been the final calendar year salary – including basic salary and an average of the three prior years ‘annual bonus payments.

Fingleton’s remuneration for the final three calendar years of his employment at Irish Nationwide were as follows

Year	Salary	Bonus	Fees	Benefits	TOTAL
2006	738,000	1,000,000	48,000	50,000	1,836,000
2007	813,000	1,400,000	53,000	48,000	2,313,000
2008	893,000	1,000,000	4,000	520,000	2,417,000

His pension would therefore have been based on ⅔ of his final’s calendar year’s salary €589,380 plus ⅔ of an average of his bonus for the final three years of his employment - €528,000 providing him a potential  annual defined benefit pension of €1,117,380.

That perhaps explains why the ‘pre-contracted’ bonus of €1 million has not been repaid. Fingleton’s remuneration from 2003 until his employment at Irish Nationwide terminated was €11, 322,000

Bank directors remuneration immune moderation

The boards of the banks and building societies which are transferring heavily discounted loans to NAMA are populated by approximately 60 individuals, a significant number of whom have been in situ for many years prior to September 2008.  Their fees and remuneration from 2005 amounted to €148.4 million.

While 11,000 loans to 850 borrowers with a nominal value of €71.2 billion have been transferred to NAMA at a discount of 59%, the bona fides of each loan have to be painstakingly tested and evaluated because the representations of the banks and building societies cannot be trusted at face value.

But the 60 directors who lent this money and endorsed these transactions were paid remuneration and fees of €16.5 million in 2009. That may represent a haircut of 47% on the €31.2 million they were paid in 2008. But the losses incurred on the NAMA loans are equivalent to 180% of the remuneration they were paid last year.

It is from this rudderless, self-serving, opportunistic, morally bankrupt culture that bonus payments of tens of millions of euro are concocted and justified.  Will the Government intercept and definitively halt this wanton plundering of taxpayers money and the willy-nilly invention of yet more customer fees and charges in 2011 spearheaded by Bank of Ireland?

Ireland ranked 2nd wealthiest–according to Bank of Ireland’s ‘Wealth of the Nation’ report

Ireland boasted 30,000 millionaires in 2006 and the number of millionaires was predicted to exceed 100,000!  The average wealth per person in Ireland, €148,130 per person that year was greater than the average wealth per person in the United Kingdom, United States, Italy, France, Germany and Canada. 

That is how Bank of Ireland viewed Ireland on 10 July 2006, a year in which the members of the Court were paid remuneration of over €5 million but increased to €10.23 million the following year because we were all so invincibly wealthy.  The report was published 10 days prior to the shareholders annual general meeting

'A key defining characteristic of Ireland’s wealth is that it is first generational by nature (peasants were, in other word, wearing shoes for the first time and could afford a toothbrush). with the vast bulk of our wealth having been created in the past ten years. The report highlights that much of this wealth has been created through gains in property investment and through a willingness to borrow to invest further. It has been entrepreneurial and more risk orientated than many other developed countries where inheritance features more prominently

The current allocation of Irish wealth to equities and cash, by contrast, is less than any of the other countries in the report. 'However, we (Bank of Ireland 10 days before the 2006 AGM) predict that this will change as property price increases move back to more realistic levels and an ageing population may act as catalysts to create growing interest in diversification into other assets, primarily investment and pension funds. As wealth grows and matures, the benefits of diversification become compelling and an increasing amount of this wealth will be allocated to other assets’.  This is a natural evolution as Ireland's wealth matures and individuals seek to protect their gains and transfer wealth to the next generation'

'The growth in wealth in the Irish economy has been astounding, (oh shucks!) with net wealth growing by 350% in 10 years. This is after taking into account the level of household debt in the economy and this highlights the rude health of Irish household's finances. We expect that net assets will grow to over €1.2 trillion by 2015, an increase of 80% in the coming decade.'

'Much has been made of the level of indebtedness in the Irish economy, with the pace of growth in debt much higher than in many other countries. However, liabilities as a percentage of total assets have only now reached international averages. While debt as a % of disposable income has increased from 89% to 140% in the last five years, the level of wealth provides an enormous cushion to borrowers (and our borrowers continue to be breast fed until their mothers reach 75 years of ages). Neither the absolute level of borrowing nor the level of borrowing relative to overall wealth are ahead of international norms indeed, we have come from significantly behind other developed countries. What is really interesting is that Irish investors have used much of this borrowing to leverage their positions in property, which, in turn, has been the engine for growth.'

Fears about rising debt levels are overstated as Irish investors leverage assets to secure further growth

This report was based on a survey of the top 8 leading OECD nations, Ireland is ranked the second wealthiest, behind Japan and ahead of the UK, US, Italy, France, Germany and Canada, showing an average wealth per head of nearly €150,000.

The report spells out precisely how rich Ireland has become over the past decade and the direction that this wealth is likely to take in the next decade. The report, covering household savings and investment patterns in an international context, paints an upbeat picture about the sustainability of recently created wealth and suggests that fears about the rising levels of debt are overstated.

According to Mark Cunningham, Managing Director, Bank of Ireland Private Banking:'A key defining characteristic of our wealth is that it is first generational by nature, with the vast bulk of our wealth having been created in the past ten years. The report highlights that much of this wealth has been created through gains in property investment and through a willingness to borrow to invest further. It has been entrepreneurial and more risk orientated than many other developed countries where inheritance features more prominently. The current allocation of Irish wealth to equities and cash, by contrast, is less than any of the other countries in the report.

'However, we predict that this will change as property price increases move back to more realistic levels and an ageing population may act as catalysts to create growing interest in diversification into other assets, primarily investment and pension funds. As wealth grows and matures, the benefits of diversification become compelling and an increasing amount of this wealth will be allocated to other assets. This is a natural evolution as Ireland's wealth matures and individuals seek to protect their gains and transfer wealth to the next generation,'added Mark Cunningham.

The Report states that while property will continue to be dominant, it will no longer be the pre-eminent asset of choice other assets, more particularly equity markets, bonds and cash will come to the fore. In 2005, Irish asset allocation stood at cash 10%, bonds 3%, equities 16% and property at 71%. By 2015, Bank of Ireland predicts that asset allocation will change to cash 12%, bonds 5%, equities at 22% and property at 61%.

Commenting at the launch of the report, the first of its kind in the Irish market, Pat O'Sullivan, Senior Economist and author of the report said:'The growth in wealth in the Irish economy has been astounding, with net wealth growing by 350% in 10 years. This is after taking into account the level of household debt in the economy and this highlights the rude health of Irish household's finances. We expect that net assets will grow to over €1.2 trillion by 2015, an increase of 80% in the coming decade.'

The report outlines that personal disposal income in Ireland has doubled over the past ten years, and it is forecast to double again over the next ten years.

The annual level of personal savings stood at €10 billion at the end of 2005 and this is forecast to increase to €13.5 billion by 2010 and to €24 billion by 2015. The latter figure equates to 14% of disposable income, which contrasts sharply with the recent averages of 1% in the US and 5% in the UK. We have to look to Germany to find a similar attitude to savings, where it approaches 10%.

Average Irish Household Assets and Net Worth 2005 – 2015

€000 per household	2005	2010	2015
Residential Property	542	684	891
Deposits	80	112	177
Pension Funds	64	90	160
Business equity	43	64	96
Investment funds	28	57	106
Direct equity	19	30	56
Commercial property	20	27	36
Gross Assets	796	1,064	1,522
Household Debt	115	200	300
NET ASSETS	681	864	1,222
Financial Assets	191	289	499

Irish bank bail out costs escalate

 

The cost to the Irish State of capitalising credit institutions at September 2010 was as follows:

 

€ Billion	Cost of acquiring shares	Preference Shares	Promissory Notes	Total State Capital at Sep 2010
Anglo Irish	4.0		18.88	22.88
AIB	0.28	2.5	-	3.78
BOI	1.95	1.8	-	3.75
INBS	0.10	-	2.60	2.70
EBS	0.10	-	0.25	0.35
TOTAL	6.43	5.3	21.75	33.48

 

The cost of future assistance is estimated at €12.26 billion

€ Billion	Projected Future Assistance	Return on Investment to date	Overall State Capital
Anglo Irish	6.4		29.28
AIB	3.7		7.48
BOI	-	-0.49	3.26
INBS	2.7		5.40
EBS	0.0		0.35
TOTAL	12.8	-0.49	45.74

 

A substantial proportion of the shares in Bank of Ireland have been converted into preference shares leaving a balance of ordinary shares amounting to €1.95 billion.

The State continues to hold €3.5 billion in preference shares.

The National Pension Reserve Fund is to underwrite a placing and open offer of €5.4 billion in AIB.  If necessary, the NPRF underwriting commitment will be satisfied by the conversion of up to €1.7 billion of its existing preference shares in AIB into ordinary shares. along with a new cash investment.for the balance of €3.7 billion in ordinary shares.

The foregoing assumes that the AIB investment in M&T Bank Buffalo New York will be sold and that other assets will also be disposed in due course.  If there is a shortfall of capital by 31 March 2011 any shortfall will be met by the conversion of a proportion of the remaining €1.8 billion of preference shares. 

Future capital needs of EBS are to be met from negotiations with several parties about its future. 

Future transfers into Anglo Irish Bank and Irish Nationwide Building Society are classified as capital transfers and a directly returnable investment.

All investments to date in AIB and BOI have been provided by the National Pension Reserve Fund.

Will credit really start to flow to Irish SME’s?

Finance Minister Brian Lenihan has published and SME Lending Plan from AIB and Bank of Ireland in which each of them indicate an intention of making €3 billion available to SME’s in 2010/11

Which customers are likely to be in a position to use such additional resources and what impact will the provision of these facilities have on lenders? Borrowers that qualify are supposed to be exporting firms. .

An SME employs fewer than 250 persons; have a turnover of less than €50 million and a balance sheet less than €43 million.

Total lending to SME’s at 31 December 2009 amounted to €32.28 billion

	€ Million
Loans	26,340
Overdrafts	2,833
Finance and Leasing	2,407
Invoice Discounting	700
	€32,280

This proposal indicates a potential 19% increase in credit availability

There were 33,192 applications for credit amounting to €1.854 billion in the fourth quarter of 2009; 131,500 for all of 2009. Credit applications for the fourth quarter of 2008 amounted to €2.892 billion. The approval rate is estimated to be 84%. The utilisation rate for overdrafts is 52%.

Profile of Credit Applications

Sector	Number of Applications Q4 2009	Amount Sought € Million	Total Borrowing
Agriculture and Forestry	9,512	379	4,150
Fishing	128	10	325
Mining and quarrying	89	9	303
Manufacturing	1,742	198	2,630
Electricity, Gas and Water	63	16	279
Construction supply	1,808	61	1,249
Wholesale and repair	4,507	346	6,954
Hotels and restaurants	1,776	125	7,327
Transport, storage and communications	1,442	69	1,512
Financial intermediation	251	15	348
Real estate and business activities	7,783	390	3,816
Health and social work	1,071	99	1,472
Other community and personal services	3,030	137	1,915
TOTAL	33,192	1,854	32,280

Each of these sectors has issues from a banking perspective which I will comment on in the context of the change in their overall borrowing profile between December 2005 and December 2009

Credit Trends 2005 – 2010

Resident non-government credit, excluding personal borrowing, residential mortgages and lending to the educational sector increased by 121% in this five-year period.

The following table summarises the change in each sector and the relationship between the deposits maintained in each sector and how these relate to borrowing by these sectors as a whole:

Sector	Change in borrowing Dec 2005 – 09 € Million	Resident Deposits Dec 2009	Resident Credit Dec 2009
Agriculture and Forestry	1,554	2,496	4,933
Fishing	-70	112	336
Mining and quarrying	177	294	415
Manufacturing	1,628	5,989	7,137
Electricity, Gas and Water	513	898	1,120
Construction	5,495	3,578	15,042
Wholesale and repair	4,867	4,591	12,591
Hotels and restaurants	3.903	655	10,905
Transport, storage and communications	781	3,766	3,005
Financial intermediation	46,540	45,106	82,676
Real estate and business activities	61,598	14,781	93,845
Health and social work	1,845	894	2,679
Other community and personal services	1,034	4,800	2,832
TOTAL	€129,865	€87,960	€237,516

These sectors, in their entirety had credit outstanding of over €237 billion at the end of December 2009, a year in which our GDP reduced by 7% to €176 billion. The SME component of this, €32.2 billion was 13.5% of the overall total.

The level of credit they were responsible for increased by 121% in the previous five years. The deposits of these sectors maintained. €87.9 billion means that the overall ratio of deposits to loans was 2.7.

It is very hard to see much action in the construction sector given the collapse in demand or in the hotel and restaurant sector given the huge overcapacity as a consequence of tax breaks valued at €1 billion. Real estate is dormant and there will not be much international growth in agriculture.

Supply Perspective

The Financial Regulator has insisted that Tier 1 capital at AIB, which in common with its counterparts, is to be 8% means that additional capital of €7.4 billion is necessary by 31 December 2010. It is not yet clear where this is to come from.

AIB is the dominant force in the Irish deposit market laying claim to customer current and deposit accounts worth €52 billion of its total customer account base of €83.9 billion.

Bank of Ireland has a similar customer account total, €85 billion – but only €35 billion of this is derived in Ireland. The remainder is sourced in the UK and capital markets. Additional credit means additional capital.

AIB’s credit commitment to these sectors at 31 December 2009 and its NAMA relationship is as follows:

 

Sector	Change in borrowing Dec 2005 – 09 AIB Resident Loans € Million	Resident Deposits NAMA AIB Bound Loans Dec 2009 €Million
Agriculture and Forestry	2,015	24
Fishing
Mining and quarrying
Manufacturing	3,108	37
Electricity, Gas and Water	844	64
Construction and Property	15,930	18,055
Wholesale and repair
Hotels and restaurants
Transport, storage and communications	2,382	621
Financial intermediation
Real estate and business activities
Health and social work
Other community and personal services
TOTAL LOAN BOOK (IE)	€69,911
TOTAL LOAN BOOK (GROUP)	€103,341

Bank of Ireland had an Irish loan book of €63,450 million, slightly less than that of AIB. The make-up of it was:

 

Residential mortgages	28,350
Property and Construction	9,450
NAMA	8,100
Corporate and SME	14,850
Consumer	2,700
TOTAL LOAN BOOK (IE)	€63,450
TOTAL LOAN BOOK (GROUP)	€119,439

Fingleton’s fantasy at Irish Nationwide is all dust

The Irish Nationwide Building Society presented a gung-ho image of its achievement, ambitions, prospects and the calibre of its chief executive, Michael Fingleton, even if the language used to express this was banal and repetitive.

Massive Expansion in Lending

The increase in mortgage lending between 2003 and 2007 was 189%.  This is why taxpayers are being stalked for €2.7 billion in bailout money.  This is why such a high proportion of the assets of this decrepit building society are being dumped on the doorstep of NAMA.  This is why the Irish Government want the citizens to be subdued, indifferent and ignorant.  Ireland’s GDP grew by 36.6% from €139.4 billion in 2003 to €190.6 billion in 2007

Loan growth Bank of Ireland between 2003 and 2007 was 19%; by AIB was 37% and loan growth at Anglo Irish Bank was 37%.

The loan growth at the three Icelandic basket-case banks between 2003 and 2007 was – Kaupthing 72%, Glitner 54% and Landsbanki 57%.

At the benign end of the scale, the Swiss banks must have appeared to Fingleton to have been in a coma.  Loan growth over this 5-year cycle at UBS was 9% and at Credit Suisse

Chicken’s come home to roost

Results for year ended 31 December 2009 reported a loss of €2.48 billion, a requirement for the Irish taxpayer to provide €2.7 billion in bailout funds, a declarations that assets with a book value of €8.7 billion will be sold to NAMA and that 96% of its loan impairment provisions relate to commercial loans.

The Chairman, Daniel Kitchen stated that the problems reported are a consequence of the nature of the operation of the business which was “clearly a flawed model” and that he was sanguine about Irish Nationwide’s capacity to ‘outperform’ (wow), in the short term.  The new chief executive, Gerard McGinn, attributed the lousy performance to the “impact of the lending policies and practices of previous management”.

It is interesting to see how previous management reported their annual results from the time the credit bubble began to inflate on 1 January 2003.

2009 Results

Interest earned from loans was €529.4 million but €324 million of this has not is ‘unrealised’!  Interest paid on customer savings accounts was down 42.3% to €420.8 million.  If the ‘unrealised’ interest were never to materialise, the net interest income of Irish Nationwide in 2009 would be –€215.4 million.

A total of €4.793 billion in debt is due for repayment before 22 September 2010. How can this be accomplished?

Of the €1.189 billion owing to banks, €1.052.3 billion is repayable on demand and the balance in less than three months.

Impaired loans amount to €2.792 billion but only €105.8 million of this impairment relates to Irish residential lending.

“The final losses on the asset portfolio remain highly uncertain”  until each and ever asset is resolved.

 

Demutualisation

While there were 23 building societies in existence when the State was founded that number shrunk to two after the passage of the Building Societies Act 1989 – EBS and Irish Nationwide. ICS Building Society was acquired by Bank of Ireland where it has operated within the Ireland Retail Division – and is about to be disposed of.

One of Fingleton’s principal goals was to demutualise ‘his’ building society

1994 Annual Report: “In order to enhance all the options open to the Society we

continue to seek a change in Section 102 of the Building Societies Act, 1989. On the

basis of the new structuring within the whole State banking and financial sector through the proposed disposal in whole or in part of the TSB Bank, ACC Bank, and

ICC Bank the restrictions of Section 102 are increasingly superfluous and irrelevant.

It is positively discriminatory against the Society, especially in that the Society must

now compete, without any privileges or advantages, with all other financial institutions to whom such a restriction does not apply. It is in the interests of our shareholders and our staff that this Section be amended to reflect the new realities of the market place.”

1998 Annual Report:  “While mutuality is still a relevant concept even if the number of practitioners are reducing (there really are now only two, Irish Nationwide and the EBS) this as we have repeated often before should not be to the exclusion of other options and the Board of the Society has never presumed on behalf of its members to exclude any such option. Indeed that is why we have consistently sought to have Section 102 of the Building Societies Act, 1989 amended to enable the Society to have the same options that are available to other competing financial institutions. We hold no brief for mutuality as an exclusive option. If we were convinced that changing the corporate status of the Society was the correct option for the members and staff of Irish Nationwide we would have no hesitation in recommending this course of action.”

1999 Annual Report “Your Society gave a commitment to review our present and future status during the year in line with market forces and developments. This review was well advanced when we were forced to pause and to reconsider the position in the light of developments in the financial markets and particularly the serious downturn in the share values of the various financial institutions. Suffice to say that everything is on hold at the moment but we will continue to monitor the situation on an ongoing basis.

We have no brief for mutuality as an exclusive option. If we were convinced that changing

the corporate status of the Society was the correct option for the members and the staff of Irish Nationwide we would have no hesitation in recommending this course of action.”

Personal Remuneration

Michael Fingleton enjoyed personal remuneration from Irish Nationwide of €10 million and a personal pension fund in 2006 just shy of €29 million.

Fingleton’s Personal Remuneration
at Irish Nationwide Building Society

2003	€910,000
2004	€1,034,000
2005	€1,269,000
2006	€1,836,000
2007	€2,313,000
2008	€2,417,000
009	€221,000
TOTAL	€10,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors’ Report 2003:  “The excellent results we now report are the strongest yet in the Society’s long history of growth and achievement and significantly enhance shareholder value.

The Society has a strong and effective management team headed by a strong and focused chief executive (Fingleton) whose experience and expertise has produced exceptional results year after year

The Society has improved its cost income ration to a new record low of 21.43%

The Society’s plans for demutualisation have made further progress during the year (2003) and the Government agreed, at the Society’s request, to bring in appropriate legislation to enable the Society achieve a solution which would reduce the uncertainty of future ownership and greatly enhance shareholder value and give the Society the options required to do so”

Directors’ Report 2004

“The excellent set of results we now present clearly reflects the effectiveness of the Society’s strategy that has been successfully implemented and developed over many years.

The success of the Society is reflected in its strong chief executive, its excellent staff, its highly qualified and experienced Board of Directors.

The Board of the Society is fully committed to demutualisation.  The Minister for the Environment, Heritage & Local Government (Martin Cullen) issued a full statement on behalf of the Government on 16 December 2003 announcing the Government approval of a package of measures to amend the current Building Societies legislation, including the removal of the five-year barrier under Section 102.  The proposed legislation is extensive and contains several provisions to enhance the future development of building societies as independent institutions as well as removing archaic unnecessary procedures.

On 15 September 2004 the Minister, Martin Cullen,  wrote to the Society stating “my Department is at present involved in the drafting process with a view to finalisation of the legislation in the Autumn (of 2004)”.  The Board of the Society,of course, welcomes those announcements and statements but is disappointed that the proposed legislation will not materialise until later in 2005.

The demutualisation process must be managed in a prudent, professional and orderly manner in order to maximise the value for the management, staff and (lastly) members.

The cost income ratio was further reduced during the year from 21.43% to a new record low of 20.24%.”

Directors’ Report 2005

“The record results we now report are the strongest yet in the Society’s long history of outstanding growth and achievement.  The excellent set of results reflects the effectiveness of the strategy that has been successfully developed and implemented over many years.

The long awaited legislation is now being drafted and we understand will be published shortly and finally approved before the Summer recess (of 2006).

In the year under review, the Society further improved its cost income ratio to a new record low of 15.18%.

Under the strong leadership of the Managing Director together with a committed and supportive staff, backed by an informed and unified Board, the underlying value of the Society has increased six-fold in the past ten years”

Directors’ Report 2006

“The record results are by far the strongest since the formation of the Society in 1873.

The results demonstrate once again the exceptional financial strength of Irish Nationwide and clearly reflect its strong management together with the effectiveness of its lending strategy developed and successfully implemented over the years.  The Society has developed a successful business model and continues to be focused on our chosen market.

In a year which may well be the last reporting year as a building society, it is appropriate that the Society should present such an outstanding set of results.

Despite relentless opposition from some of our members’ and other vested interests’, the long awaited legislation formally became law in August 2006.  The Board decided to await the publication of the 2006 audited accounts before formally going to the market.  The value of the Society has been enhanced and the net book worth of the Society is up 27% to over €1.2 billion”.

Directors’ Report 2007

“The Board will continue to seek a purchaser for the Society at an acceptable price and will consider all the options open to it to achieve the objective and to realise the optimum value for its members and staff.

The exemplary results we are privileged to report are by far the strongest yet in the Society’s long history of growth and achievement and significantly increase shareholders value with the Society’s net book worth now in excess of €1.5 billion.

The cost income ratio is now at a record low of 10% having fallen from 14.44% in 2006”

Directors Report 2008

“ … was a disappointing year for the Society due to the disruption in global financial systems, the onset of the recession in Ireland and the UK and the resultant downturn in property values. 

Cost control has always been and continues to be a major objective of the Society’s policy.  The 2008 cost income ratio is 17% due to reduced income in 2008 rather than cost increases.

The Board wishes to thank Mr Fingleton for the enormous and unique contribution he has made to the Society over the past 37 years and wishes both Michael and his wife, Eileen, many happy years of retirement”

Directors’ Report 2009

“It is with great disappointment that I have to present to you the accounts for the year ended 31 December 2009 which reflect unprecedented levels of impairment on our loan book which gave rise to losses on a massive scale in the context of the Society.  The collapse of property markets in Ireland and abroad gave rise to the impairments but this was exacerbated by the nature of the operation of the business which was clearly a flawed model.  Final losses on the asset portfolio remain highly uncertain.  The financial results reflect the impact of the lending policies and practices of the previous management.  The scale of losses reflect the failure of the Society’s commercial lending strategy which was over reliant on asset values.  96% of the loan impairment provisions relate to commercial loans.

The Group’s customer accounts decreased by €1.5 billion in 2009 as a result of deposit outflows from the Group’s Isle of Man subsidiary and reflects concerns held by UK investors about deposit security despite the Irish sovereign guarantee.  2010 remains highly uncertain in the context of an industry seeking to define its future structure.”

Mortgage Lending and Mortgage Funding

 

	Total Mortgages €	Commercial Mortgages % Total	Customer Accounts (€ Savings)
2003	4,248,000		3,465,000
2004	5,553,000	35%	4,755,500
2005	7,572,000	32%	5,733,500
2006	10,306,000	76%	6,602,700
2007	12,281,000	80%	7,250,100
2008	10,473,900	78%	6,785,000

Response of dithering Taoiseach to Boucher pension deal is devastating

I watched with quivering embarrassment, revulsion and genuine horror, as Brian Cowen, our Taoiseach, waffled on Monday in Tullamore and again yesterday in the Dáil Éireann about the €1.4 million spent by the Court jesters of Bank of Ireland bloating the pension entitlement of their chief executive, the esteemed insider, Mr Boucher.  Cowen states that he has no legal power to intervene in this sacred contract between rational parties, but suggests that it would be ‘helpful in public perception terms’ if Boucher refused to accept the bloated pension.  Cowen urges public sector workers, who are to vote on a pay freeze of indeterminate duration, that they ‘should see the big picture’.  I have no doubt they will and see it very clearly.  They will see it in kaleidoscopic clarity.

That, my dear readers, is precisely how the Irish financial system was regulated by flaccid, stuttering, incompetent, bow-legged, politically compromised morons and gobshites, before the economy collapsed from exhaustion in early 2007 with a half million people lost their jobs and everybody’s equity holdings fleeced to near extinction. 

The verbal and leadership skills of our regulators and leaders did not move beyond nuanced euphemisms and when combined into paragraphs these looked and sounded as robust as a pre-fabricated hen house in a raging storm.

When a chief executive presides over a company that loses €1.8 billion, equivalent to no less than 98% of its market capitalisation and that loss is substantially attributable to his own decisions, what usually follows is the presentation of a crisp P-45.  Very few are presented with a gilded pension allowing them to retire with defined benefits of a magnitude that is beyond the range of most people.

Cowen will down in history as the most dangerous Minister for Finance the country ever had; the Minister who supervised an expansionary credit bubble that has beggared the nation the consequences of which he never understood.  As Taoiseach, he presents as a delusionary, curmudgeon who blames everyone but his own ineptitude for what has transpired. and never a word of apology.

His body language and demeanour when referring to Boucher has been as taciturn as might be anticipated had an elderly, blind, poodle piddled beside him on the floor of a convent parlour.

Contract, or no contract, this is a matter of fundamental public interest, morality and moral authority - the Taoiseach's moral authority.

The value of the Bank of Ireland Staff Pension funds are reporting a deficit of over €1.6 billion, a deficit that has increased by over 200% since 2008.  The funds' assets are now less than 70% of the present value of future obligations.

If this adverse trend were to continue, even at a more moderate rate of deterioration, there is a real and grave threat that there will not be enough resources to pay Bank of Ireland pensions' in full.
How would Fianna Fail and Green Party candidates feel about canvassing Bank pensioners' in forthcoming elections if they are only receiving forty or fifty percent of the pension payment they are entitled to and personally paid for, against a background of the Taoiseach's apparent indifference to the Boucher gilded pension deal that has been funded from gigantic Bank of Ireland losses and bailout money?

Bank of Ireland’s response to CIROC Report

The publication of the Annual Report of Bank of Ireland for the nine months ending 31 December 2009 provides the first opportunity to see how the Bank is complying with the recommendations of the Covered Institutions Remuneration Oversight Committee (CIROC).

Their recommendations were contained in the report made to the Minister for Finance on 27 February 2009, two days after the appointment of insider, Richie Boucher, as chief executive of Bank of Ireland was announced. 

 

Position	Recommended by CIROC – adjusted for 9 month period	Actual
R Boucher Chief Executive	€517,500	€1,996,000	including a pension fund top-up of €1,490,000
P Molloy Governor	€138,000	€194,000	for six months from 3 July 2009
Chair of Major Committee	€51,750	€86,000     €96,000   €60,000   €60,000 €67,000	Deputy Governor and senior independent director Group Audit Committee Group Remuneration Committee Court Risk Committee Pension Fund Trustees
Ordinary board member		€41,250	1 @ €26k for 3 months 1 @ €37k for 6 months 2 @ €59,000 1 @ €65,000

 

Boucher’s Pension

Directors’ of the Bank of Ireland are members of the Bank Staff Pension Fund, a defined benefit plan, which is a contributory scheme at the rate of 2½% of salary. Benefits are based on an accrual rate of ^1/₆₀ of pensionable salary for each year of a Director’s pensionable service with a maximum of ⁴⁰_/60th payable on normal retirement, at age 60.

Boucher became joined Bank of Ireland in December 2003. He was appointed an executive director on 6 October 2006; chief executive on 25 February 2009.

His normal retirement should be in 2017 at which time he would have accumulated 13 years of pensionable service providing him with a pension of ¹³_/60th of his final salary - €261,625 based on prevailing rates. But the impact of this deal is that can take a hop, skip and jump at the age of 55 with close to €400,000 in his pocket.  That is over twice the salary of the Minister for Finance and significantly more than all top-level office holders whose positions are of systemic importance.

Pension Fund Deficit

The Bank Staff Pension Fund is running a deficit of €1,631,000,000 and its assets are only capable of meeting under 70% of the present value of its obligations amounting to €5.3 billion. How is it possible for a pension fund with a deficit of this order to take on additional burden?  What tone does this decision indicate to staff and stakeholders’ generally?

This pension fund was closed to new members from 1 October 2006, five days before Boucher became an executive director and the only exception was in respect of entry-level employees who joined Bank of Ireland between that date and 21 November 2007. All others are obliged to become members of the Bank of Ireland Group Pension Fund of the group’s UK pension fund – both of which are hybrid schemes which include elements of a defined benefit and a defined contribution scheme.

The CIROC Report is scathing in its criticism of bank top-management who make little, or no, contribution for their pensions and advocated that pension arrangements for senior executives should be at least broadly similar to those applicable to the generality of the staff. How many staff in Bank of Ireland can retire at the age of 55 with 11 years’ service and a pension based on 59% of their salary?

Share Ownership Policy

The Annual Reports of Bank of Ireland for 2005, 2006 , 2007 and 2008 states that ‘executive directors are expected, over time, to build a Group stock ownership equivalent to a minimum of 100% of salary’.

Boucher owns 33,127 ordinary shares in Bank of Ireland. If he were as attentive to this policy as he expects the Bank to be to his pension he would own a minimum of 543,307 ordinary shares.

Perhaps Boucher and Molloy could approach the Boucher pension issue with the same level of indifference that he displays towards the share ownership policy.

Requirement to boost capital of Irish banks is a huge challenge.

The nation recoils, stunned, by the scale of the NAMA enterprise.   It is interesting to reflect on the scale of additional capital needed by the five banks and building societies that are NAMA clients.  Collectively, NAMA clients’ require additional capital of  €21.8 billion by Christmas, with Anglo Irish Bank accounting for €8.3 billion of this.  This is to be provided by the State as will €3.2 billion needed by the two building societies.  But AIB and Bank of Ireland have to find €10.1 billion by Christmas.

The market capitalisation of all the companies quoted on The Irish Stock Exchange is just shy of €130 billion today.  This figure includes relatively large market capitalisation in CRH €13.2 billion, Diageo €31.2 billion, Tesco €31.1 billion and Tullow Oil €12.4 billion.

The market capitalisation of AIB is €1.05 billion and this bank requires an additional €7.4 billion.  Bank of Ireland has a market capitalisation of €1.6 billion and requires additional capital of €2.7 billion.  Irish Life & Permanent Holdings Plc, which is not a NAMA client, has a market capitalisation of €808 million.  This is the bank which coughed up €7.5 billion that distorted the balance sheet of Anglo Irish Bank on 30 September 2008.

The cumulative loan book of the five NAMA clients and Permanent TSB is over €400 billion and this includes loans made in Ireland and elsewhere.  Approximately €100 billion of the €147.2 billion of residential mortgages in Ireland is attributable to these six institutions.  This is a phenomenal scale of indebtedness and must be seen in the context of housing trends in Ireland over the past decade.

A recent UCD study of residential vacancy levels showed that there were over 345,000 vacant housing units in the country.  Allowing for 64,520 holiday homes which are vacant from time to time and a standard 5% vacancy rate which is the norm and that approximately 10,000 houses are obsolete, there are still over 170,000 vacant houses in the country that fall into the ‘exceptional’ character.

Outstanding private sector credit in Ireland, according to the latest data from the Central Bank is €365.5 billion.  It had exceeded €400 billion in October and November 2008.  While the overall level of private sector credit has been somewhat reduced, the amount of mortgage credit outstanding has remained stubbornly high – close to €148 billion since September 2008 when the Irish banking crisis exploded.

Real estate indebtedness if north of €95 billion while the construction sector owes a further €19 billion.  Agriculture and forestry owe €5.3 billion.  The manufacturing sector owes €7.8 billion. The hotel and restaurant sector, which apparently has 15,000 room in excess of accommodation demand owes €11.2 billion.

Where is the additional capital to come from when all of these circumstances are taken into account.  How many decades will it take for the Irish economy to experience a positive charge?  Comments about the collapse of Lehman Brothers and Bear Sterns are comparable to describing a hurricane in the Caribbean.  The damage inflicted on the Irish economy is due to delinquency closer to home and those who inflicted this might have the courage to own up to it.

“Twaide up to a bigga house” Bank of Ireland

THE other morning I wondered if I had awakened on April Fools Day. it was stills dark as my transistor radio came to life and the morning news reported that the awful devastation from flooding throughout the country was now impacting the capital. Then there was an advertisement from Bank of Ireland Mortgages urging listeners’ “to twaide up to a bigga house”. 

I gathered my chattels and then I spotted the house of my dreams, pictured above.  Perhaps I really should escape the park bench,  which is my winter home, having recovered form the symptoms of swine flu and apply to Bank of Ireland Mortgages with my Roma gypsy lover before she starts her 10-hour shift begging from the early morning commuters and offering herself to truck drivers at the Ferryport.

I thought how tuned in Bank of Ireland are to the sentiment of the country. Those that are not bailing out flood water are coping with 413,000 on the Live Register, 12½% unemployment, the prospects of further cuts in income for one reason, or another. Had the captains of finance had become the admirals of empathy, equipped with new periscopes?

My mind wandered again and I imagined what would Bank of Ireland be like if it were a human being and not a corporate entity. I had this vivid image of an osteoporosis-stricken female in her seventies, who had lost 37% of her bone density, strutting along a beach in The Gambia. Her hair had once been blonde, but now it resembled dry bleached straw under the unforgiving late morning sun. Her heavily tanned body was almost fully exposed as all that covered the critical wrinkles  was a bikini bottom made from dental floss. While her appetite for pleasure and hedonism was infinite her finer assets were no longer as elegant as they once had been. She had seduced an East African migrant, 50 years younger than her, who was a vendor on the beach selling fresh pineapple to tourists. A woman with an established lifestyle of elegance, a wheezing voice and rustic charm, she also had great ambitions for him, her horny, insatiable go-getter. His formal education ended at the age of nine but she envisaged him becoming her house boy at her suburban Dublin mansion, Chew Fatima. His Bermuda shorts would be replaced by tailored trousers and a white Charvais shirt complete with silver plated cuff links. An occasional visit to a barber was intended to make him socially at ease with the the other court jesters already employed in the cellar of the mansion.

The Governor of the Bank, Mr Molloy, appeared in Leinster House last week to brief the legislators about current trends and future prospects. He was accompanied by the young buck his predecessor hired to mind the shop and report the Bank’s losses every six months, most of them attributable directly to himself. Old Mr Molloy has been around for a long time. His value is not just in what he knows but who he knows.  The Long Fellow and The Short Fellow ran the show in Ireland when his career commenced. Éamon de Valera was Taoiseach and Seán T O’Kelly was President and principal kisser of the rings of all bishops’ and whatever other part of their anatomy required soothing.

Molloy described to the legislators  ‘the appreciation’ of the Bank for the ‘significant’ support provided by the people. Allowing for the Doctrine of Mental Reservation the significance of this support is that the people have provided €3.5 billion to a business with a market capitalisation of €1.68 billion. He outlined how the Bank is meeting the needs of Irish customers, business and personal, many of who are skittish about credit availability and the rules and procedures to access same. For the record – the Bank has deposits of €34 billion from Ireland and has loans due from Irish customers of slightly over €62 billion.  They obtain around €53 billion of deposits elsewhere but the Bank is coincidentally curtailing its business activities elsewhere.

I was particularly intrigued by Old Mr Molloy’s remarks about mortgages. The country as a whole owes €147.8 billion in residential mortgages as of the end of October 2009. The Bank of Ireland share of this is €28 billion of which 21,000 of their 196,000 Irish mortgage customers are in negative equity-land. €1.5 billion has been lent in the first nine months of 2009, of which 31.6% went to first time buyers. This implies they lent €1.05 billion to other categories. They consider 350 mortgage applications per week – 18,000 a year who are acquiring properties in flood plains, settlements, townships of more remote fields of thistles – always mindful of the circumstances of the 3,436 individuals who claim tax relief in respect of urban renewal, the 1,149 who claim tax relief in respect of town renewal and, of course, never forgetting the 1,167 who claim tax relief for seaside resorts or the 2,137 who qualify for tax relief in respect of rural renewal.

Mr Molloy saw mortgage trends that no other white man has seen in Ireland this year – signs of an uplift designed to raise the spirit of harassed legislators. This, he said, is reflected in “an improvement in overall applications and drawdown trends compared with previous periods”. Wow!  Could a Nigerian even outclass this man’s supreme optimism?

This is the official position with respect to mortgage approvals and payments in Ireland for the first six months of 2009 compared to the same period in 2008:

 

New Houses

	2008	2009	Change
Number of loans approved	15,805	7,264	-8,541
Value of loans approved	€4,164.2	€1,592.7	-€2,571.5
Number of loans paid	14,759	4,732	-10,027
Value of loans paid	€3,971.1	€1,117.5	-€2,853.6
Average loan paid	€269,000	€236,158

 

Secondhand Houses

	2008	2009	Change
Number of loans approved	19.736	7,739	-11,997
Value of loans approved	€5,784.1	€1,948.7	-€3,835.4
Number of loans paid	30,033	12,216	-17,817
Value of loans paid	€8,430.1	€2,921.1	-€5,509
Average loan paid	€280,690	€239,120

 

I am not really sure what this old man’s optimism is based on.  Perhaps he is thinking of the first year he worked for the Bank of Ireland when 2,000 women in Ireland, who already had 10 children, gave birth to an eleventh.