Monday, February 27, 2012

Lloyds Says Two-Thirds of Irish Loans May Not Be Repaid in Full - Businessweek

By Joe Brennan

Feb. 24 (Bloomberg) -- Lloyds Banking Group Plc, Britain’s biggest mortgage lender, said two-thirds of its 24.8 billion pounds ($38.9 billion) of loans in Ireland are unlikely to be paid back in full following the country’s real-estate crash.

About 16.4 billion pounds of loans to Irish borrowers were impaired at the end of last year, London-based Lloyds said in a statement today. That’s up from 53 percent at the end of 2010.

Lloyds, which today reported a wider-than-estimated loss of 2.8 billion pounds for 2011, shut its Irish unit in 2010 as losses soared and is running down its remaining assets. The worst sector was commercial real estate, where 90 percent of the bank’s 10.9 billion pounds of loans were impaired at the end of 2011.

“This is by far the most troubled Irish loan book that we have seen so far” among universal lenders, said Karl Goggin, an analyst at Dublin-based NCB Stockbrokers. “The level of provisioning suggests they are kitchen-sinking the loan book as Lloyds looks to exit Ireland as quickly as possible.”

Ireland’s commercial property prices have tumbled 65 percent since 2007 and home prices have almost halved in the period. Lloyds losses can be traced to Bank of Scotland Plc’s entry into the country’s mortgage market in 1999, followed two years later by its purchase of state-owned lender ICC. The bank offered “substantially lower rates than domestic banks at the time,” according to an Irish government-commissioned report in April.

Further Declines

New provisions for bad loans in Ireland fell by 25 percent last year to 3.19 billion pounds, Lloyds said today. In all, the lender has set aside 10.2 billion pounds to cover loan losses, equivalent to 62 percent of impaired loans. That’s up from 54 percent at the end of 2010 because of further declines in the commercial real-estate market during 2011, Lloyds said today.

By comparison, Bank of Ireland Plc, the country’s largest lender, said about 17 percent of its Irish loans were impaired at the end of last year, according to Colm Foley, an analyst at Dublin-based Goodbody Stockbrokers. That figure excludes about 10 billion euros ($13.4 billion) of real estate loans the lender sold to the National Asset Management Agency, Ireland’s so called bad bank, in the past two years at an average loss of 44 percent.

Anglo Irish Bank Corp., nationalized in 2009, was forced to take a 62 percent loss on 34 billion euros of loans it sold to NAMA. The lender, since renamed Irish Bank Resolution Corp., said in August that 54.5 percent of its remaining 24.9 billion euros of loans were impaired at the end of June.

‘Most Aggressive’

“Lloyds appears to be the most aggressive institution in crystallizing impairments” in Ireland, said Foley in a note today. “Whether this is a strategy or a reflection of the quality of the loan portfolio is unclear.”

Lloyds and fellow British lender Royal Bank of Scotland Plc, which bought Dublin-based Ulster Bank in 2000, “competed aggressively” with local banks and introduced products that “posed new risks for both the borrower and the lender,” the Irish report said in April.

Lloyds, which received a 20 billion-pound government bailout in 2008, has transferred management of its Irish holdings to Certus, a company set up by the bank’s former Irish management.

Lloyds injected about 8 billion euros of capital into its Irish unit between late 2008 the end of 2010, when it subsumed loans made in the country into the London-based parent company.

‘Least Wise Decisions’

RBS, Britain’s biggest government-owned lender, has pumped as much as 10 billion pounds into its Irish unit since 2008 to absorb losses from the country’s real-estate bubble, a spokesman for the Edinburgh-based lender said yesterday.

“The most money that RBS lost, the least wise decisions were property lending in the U.K. and Ireland of which Ireland was the worst of all,” Chief Executive Officer Stephen Hester, 51, said yesterday. RBS has pumped “too much” money into the unit, he said.

Lloyds’s approach to Ireland, “is a positive development and suggests that Lloyds is ahead of other banks in recognizing losses, even though Ireland’s state-guaranteed banks have been recapitalized to cope with pretty severe losses,” said Goggin.

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Irish could fill up to 80,000 construction jobs in Canada - The Irish Times - Mon, Feb 27, 2012


UP TO 80,000 jobs in British Columbia could be filled by Irish construction workers, according to a delegation from western Canada which is visiting Ireland this week.

Manley MacLachlan, president of the British Columbia Construction Association, which represents over 2,000 companies, said yesterday there was “a world of opportunities” for suitable workers in the western province.

Mr MacLachlan is one of an 11-strong delegation that has travelled to Ireland from British Columbia and Alberta to find skilled labour to help fill thousands of vacancies in the construction and related trades. The British Columbia ministry of jobs, tourism and innovation is also represented.

The delegation will be holding talks with Government departments, Fás, the Construction Industry Federation and other groups in the coming week. They will also attend the Dublin Working Abroad Expo next weekend in the RDS.

About 335,000 job openings are anticipated between 2012 and 2014 in British Columbia, which has a population of 4.5 million and is physically more than 10 times the size of Ireland.

Speaking to The Irish Times yesterday, Mr MacLachlan said the trip had two objectives: to better understand the apprenticeship system in Ireland in order to establish whether there is a close match with the system in Western Canada, and to investigate opportunities to attract skilled construction workers.

“We have a significant amount of work scheduled and a very significant shortfall in skilled workers,” he said.

The economy in British Columbia was “relatively good”, he said, and there were many projects planned, including residential, mining and oil and gas worth 210 billion Canadian dollars (€156 billion) “in the market, under development or being planned”.

Mr MacLachlan said the industry was “under pressure” because 35,000 workers were due to retire shortly and would leave large gaps in senior site management. They were not only looking for qualified tradesmen but would also need experienced managers.

A further 45,000 jobs would need to be filled to complete the major projects already planned.

The delegation was only focused on Ireland at present, he said.

“Quite frankly, we anticipate a real match between the training systems and the cultural similarities between both cultures which is very attractive to us,” he said.

The British Columbia Provincial Nominee Program meant visa applications could be dealt with in a “relatively easy manner”, Mr MacLachlan said, and if put together properly, applications could be processed to allow Irish applicants to begin work in 90 days. Qualified applicants could also bring spouses.

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Monday, February 20, 2012

Nama will be in dock at Treasury court case -

Sunday February 19 2012

WHEN Nama chairman Frank Daly was chairman of the Revenue Commissioners, it's known that he liked to read the Sunday papers.

The stories Frank liked the most were the ones in which he found out which high-flyer had a new Bentley, a new helicopter or even a private jet waiting on the tarmac to spirit them away to faraway places at a moment's notice.

Armed with that information, the then Revenue boss liked his people to find out where the money to buy the boomtime baubles had come from, and more importantly, whether tax had been paid on it.

Given Frank Daly's longstanding interest in the lifestyles of Ireland's rich and famous, it wouldn't be entirely unreasonable to suggest that before he ever joined Nama, he may have known something of at least one aspect of the lives of Richard Barrett and Johnny Ronan given the huge success they have enjoyed since founding Treasury Holdings in 1989.

What he probably didn't know that much about though, was how the Treasury chiefs do business, and just how fiercely they protect their interests if someone threatens it, be that by accident or design.

All that will change this Tuesday when Mr Daly and his closest colleague, Nama chief executive Brendan McDonagh come face to face with Messrs Barrett and Ronan in the High Court for the start of what is expected to be the most significant challenge yet to the State's toxic loans agency and the veil of impenetrable secrecy in which it operates. Central to proceedings is the developer's bid to have Nama's appointment of receivers to 36 of its prime Irish property assets overturned.

In taking the case against the State's so-called 'bad bank', Treasury is, according to sources familiar with the matter, prepared to do everything within its still-considerable power to secure victory, and in the process expose what it sees as Nama's "misleading, unreasonable and entirely unacceptable" behaviour in relation to its business.

The first casualty in what is gearing up to be a bitter legal battle between the two sides, sources say, will be the strict secrecy that Frank Daly and Nama's chief executive Brendan McDonagh have time and time again insisted is essential in the dealings they have with the developers on their books.

Indeed, the Sunday Independent understands that in setting out its case, Treasury is determined to fix both Mr Daly and Mr McDonagh firmly in its crosshairs, with a series of allegations in relation to their personal handling of negotiations.

While many people may find it difficult to accept the arguments put forth by two high-profile developers given all that has been said and written about the role the property industry has played in Ireland's economic downfall, Treasury's engagement of world-renowned economist, Dr Michael Cragg as an expert witness on its behalf, will prove painful to Nama and its already battered reputation.

Dr Cragg -- who heads up the hugely-respected global economic consultancy, the Brattle Group -- is no stranger to cases such as the one Treasury is now fighting, having conducted research, testified, published, taught and made presentations on the economic crisis and all its elements including bank failures and property financing.

Chief among the investigations he has conducted are the failure of Lehman Brothers -- the favoured fall guy of governments across the Western world for their countries' respective economic woes. Notwithstanding his impressive CV, Dr Cragg is probably best known here in Ireland as a colleague of Nobel Economics Laureate Joseph Stiglitz, with whom he co-authored a major critique of Ireland's so-called bailout deal with the EU/IMF/ECB 'troika'.

Armed with information in relation to Treasury's dealings with Nama in the months leading up to the final breakdown of relations last month, Dr Cragg is understood to have compiled a devastating critique of the agency and the strategy it employed in Treasury's case.

Most harmful to Nama will be Dr Cragg's charge that its appointment of receivers to Treasury did not follow an economically reasonable due process, the results of which could see the value of the company's property assets destroyed.

It is understood that Dr Cragg will say that Nama's actions neither serve its interests or that of Treasury. Perhaps most crucially, he will say Nama's actions do not serve the wider public interest.

Informing the economist's conclusion to a significant degree is a claim in relation to the manner in which Nama chief executive Brendan McDonagh and Nama chairman Frank Daly are alleged to have personally handled discussions with Treasury chiefs in the final weeks before the agency's board decided on the appointment of receivers.

According to well-placed sources, Treasury will claim that both Mr Daly and Mr McDonagh "actively dissuaded" them at a meeting on November 8 last from seeking to bring proposals from two potential investors -- Australian bank Macquarie and US real estate giant Hines -- before Nama's credit committee on December 6 or its board on December 8.

The same sources claim that Mr McDonagh told Treasury at the November 8 meeting that Nama didn't want to discuss the issue of investor bids until the company had agreed a formal term sheet with his agency.

Interestingly, Treasury's submission of its final creditors' strategy came on December 7, a day after Nama's credit committee had decided to recommend the appointment of receivers to the agency's board.

Should Treasury be able to prove to the court for example that Nama's credit committee and board were unaware, or only partially aware of the existence of two significant third-party investors for Treasury's portfolio when they made the decision to pull the plug and appoint receivers, Messrs Daly and McDonagh will have some serious explaining to do.

For while a significant segment of the Irish public may have drawn some degree of solace from media reports of Nama's 'no-nonsense' attitude towards developers over the past two years, they won't be happy if they find out that the agency's strategy has ended up costing them more money through the loss of a major foreign investment by either Hines or Macquarie.

Incredibly, offers from the two investors were on the table right up until 4pm on January 25 last -- a time and date which marked the end of a two-week standstill period in which Treasury chiefs desperately sought to put together a deal that would wind back Nama's decision to appoint receivers.

The High Court is expected to hear claims that proposals from Hines and Macquarie received only "limited evaluation" during those two weeks and that receivers were appointed at 4:01pm precisely once the deadline arrived.

In the case of Hines' proposals, an email sent to Nama a full 45 minutes before the 4pm deadline, was not brought to the attention of the agency's board. Sources close to Nama confirmed this to the Sunday Independent, saying: "It [the email] wasn't passed on as officials felt it wouldn't have an impact on the board's decision."

In the case of Nama's treatment of Macquarie's offer, Treasury is expected to claim in court that the agency rejected an offer that was some €68m higher than a previous offer it had accepted from CIM. Also expected to feature in Treasury's evidence are claims that Nama effectively undermined at the last minute an offer from the Malaysian government backed SP Setia for its Battersea Power Station site in London with what one well-informed source describes as "unreasonable and untimely demands".

Had the offer been accepted, the source says that Treasury would have been able to pay back 100 per cent of its Battersea loans.

Dr Michael Cragg, for his part, would appear to be at a loss as to why Nama decided not to accept proposals from either Macquarie or Hines for the Treasury assets it has now placed into receivership.

Dr Cragg's view that Nama's behaviour towards the two potential investors was "economically irrational" will be especially embarrassing for the agency as it seeks to maintain the dwindling confidence of the State whose economic interests it was established to protect.

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'Beacon' of light emerges from Dublin 'dead zone' -

By Mark Keenan

Sunday February 19 2012

At the Beacon South Quarter in Dublin's Sandyford, the long-standing joke has worn thin -- the comical giant dust cover infamously draped over the largest unfinished South Quarter apartment block has now faded and is being shredded by the wind.

Like the Anglo docklands headquarters shell and the long vacant Walford, the stillborn Beacon block, with its fanciful cover of painted balcony inhabitants peering to the Dublin mountains, had became a national icon for all the wrong reasons -- a great big poster building for the crash. So the Beacon should be an unlikely spot to find signs of elusive economic green shoots.

But at lunchtime on Friday in the streets beneath the raggy banner, there's no time for recession. People are moving about in numbers, in good spirits and with purpose. The location appears to be having a new burst of life. At Ben Dunne's gym -- opened just two months ago -- a line of well-groomed young men are marching determinedly on the treadmills. Aldi has opened to join Dunnes Stores, and the shut Piano Bar is about to be reopened as a sports pub. Fiat is soon expected to join the cluster of car sales outlets. Late last year the Cluid housing association moved to acquire 58 apartments over two floors, which will soon be occupied, and receiver Mazars has been slashing commercial rents -- a key factor cited by many in bringing in new businesses. There have even been reports that some of the key empty towers have been sold on by Nama to developers who are eager to complete them.

The four-star Beacon boutique hotel is fully booked on the night at €115 for a double room. The queues of business tourists are spilling off coaches and dragging wheelie baggage to the check-in desk. The lobby and bar are also packed for lunch, and will be again in the evening.

Out back, even the taxi men are upbeat. One driver, formerly an architectural engineer, says he has secured his first job interview in more than three years, while another notes that his airport trips have increased from one a week to perhaps seven a week.

The hotel's Pakistan-born manager Raja Kamran believes the presence of the big multinationals has anchored the area, while recent rent decreases for offices have helped bring still more activities in. "I can't understand why property owners in the city centre will leave their shops closed rather than take lower rents," he says. "We've learnt here in Sandyford that business won't come if your shutters are down."

Outside, swarms of well-dressed twenty- and thirty-somethings are milling around the al fresco spread laid on by Irish Village Markets -- a mobile carnival of reborn recession casualties who have transformed themselves into foodie entrepreneurs. Founded by organic farmer Des Vallely, the mobile market has 19 covered stalls selling competitively priced gourmet dishes from paella to bratwurst and falafel -- and even horse kebabs for Sandyford's French workers.

Leah Duxbury was an events manager with a big company when the recession hit. She and her boyfriend John, a former sales executive, started Dux &Co, a gourmet meatball and pasta outlet. Last year their tapas plate won the prize for best dish in the Dublin Street Food Awards. "It's hard work but we're building a brand and we're planning to open a restaurant."

Sally Kenny has just started a new job at the Now Factory, a wholly Irish tech-based communications consultancy that employed 60 people this time last year and has since more than doubled its staff to 130. "It's all very exciting -- this company really is going places."

Swede Karin Lindell started in October with Service Source, also hiring. Like many Europeans employed around the Beacon, she doesn't think Ireland is such a bad place to be right now. "I like it. It's good."

Over a mall beside the Beacon Hospital, pharmacist Mary Guinee says new healthcare firms are opening in the Beacon Court Mall.

"Our traffic is definitely up thanks to the spate of new health care businesses."

Among these is Irish Private Medical Centres, set up four months ago by Tristan Healy and David Howard.

"People are fed up going to GPs who haven't lowered their prices and keep charging them large," says Healy. "We offer a full GP service on a 'club' system, which costs €30 per month for a family with three children or €10 per month for someone over 55. Once you're a member, you can visit as many times as you like without paying more."

They have 1,500 members and are already planning a second outlet.

Over at Omar's cafe, Brian Whelan is having a late lunch. The boss of helps air passengers to reclaim tax on missed flights. "Years ago there were 36 of us, and last year we were down to two. Twelve months on and things are a bit more stable -- there are four employed here now and we're hanging in there. Debtors are being more considerate now and creditors are not nearly as aggressive."

At "The Edge" block 1, Brendan (not his real name), a separated dad, says he is happy with the two-bed he bought four years ago. "Eleven blocks were built; eight are fully occupied, two are finished but empty. They're well built actually. My children live nearby, it's 20 minutes to work on the Luas and I'm beside the M50. What more do you want?"

Back in the hotel bar, Marcin Szot, a Polish photographer who lives in the apartments above the Beacon, meets Jill McCann and Ray Cotter, an engaged couple. The three work together in a tobacco multinational located nearby and they're here to discuss their wedding photos.

"There are far more people around these days -- in the apartments, in the hotel, in the general area. When I came here first it was dead, more unfinished," says Szot.

Seated nearby are Miriam Burke and Anne-Marie Turcotte, professional trainers flown into Dublin on contract by Microsoft.

"We always stay here when we come to Dublin, but this is the first time there's ever been a question of getting a room because it's fully booked," says Burke, who is based in Barcelona. "As an occasional visitor home I'm definitely getting a sense that Ireland has already done the hard part and is starting to come out of the crisis when other countries like Spain are not even getting to grips with it yet."

Turcotte, a soft-spoken French Canadian currently based in Lausanne, adds: "Even Switzerland is only now starting to ask itself hard questions as the effects of the global crisis start to sink in. But to me the Irish are like the Lebanese, once everything stops falling down around them they get back out again, make some jokes and start rebuilding. Things might actually be better than some Irish people believe -- but it's also clear to me that others are simply getting on with it."

- Mark Keenan

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Mortgages in arrears up 10% in 2011 final quarter - The Irish Times - Sat, Feb 18, 2012


A JUMP OF 10 per cent in the number of homeowners in mortgage arrears between the end of September and the end of December last has been described as “astonishing” by lobby group New Beginning.

Published yesterday, the Central Bank figures show that 70,911 mortgages had fallen behind by three months or more at the end of December 2011.

The increase to over 9 per cent in the number of home-loan repayments in arrears is the largest increase since Central Bank records began nearly two years ago.

In March 2010, the number of mortgages in arrears was 49,609. By the end of last year, however, that figure had risen by 42 per cent to 70,911.

David Hall, co-founder of New Beginning, a group that provides legal representation to hard-pressed mortgage holders, said the figures showed “no recovery of any shape or form”.

The quarterly figures from the Central Bank show that the numbers of householders in mortgage arrears at the end of December is up by almost 8,000 compared to the end of September last year.

The figures show that 74,379 residential mortgage accounts had been restructured compared to 69,735 at the end of September.

More than 36,797 householders are keeping up with the restructured arrangements, but 37,582 are experiencing some form of arrears.

Banks repossessed 133 properties during the quarter, the majority of which – 83 – were voluntarily surrendered or abandoned. The remaining were repossessed by court order.

During the quarter, legal proceedings taken in 95 cases comprised arrears totalling €13.9 million on loans equating to €37.8 million. Some 187 court proceedings were concluded, of which the courts granted orders for possession or sale in 109 cases.

The Central Bank said the number of mortgages also continued to fall in the three months to the end of December, with 768,917 private residential mortgages held in the State, totalling €113.5 billion. This compares with 794,609 held at the end of September 2009.

Mr Hall described as “astonishing” that three out of four were in arrears of 180 days or more. Mr Hall said this proved that “once you start on the slippery slope of arrears and difficulty, it continues down”.

He said while efforts to work with borrowers to restructure loans were welcome, he questioned if they were just “keeping borrowers in a holding area for a lot longer”.

“The concern would be while there is an attempt to show some restructuring and it is appreciated, it’s not necessarily a good thing.”

Mr Hall said the repossession figures published by the Central Bank showed only those repossessions that had completed and did not reflect the far higher number that were “in train”.

He said with the figures putting the combined number of final demand notices and legal proceedings in progress at 12,000, it was “disingenuous” for the Central Bank to quote such small repossession figures.

Mr Hall described the figures as indicative that “this is a problem that is not going away.”

Director of Consumer Protection at the Central Bank Bernard Sheridan said it was critical for borrowers in difficulty to get in touch with their lender as soon as possible.

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The pub loses its pulling power - The Irish Times - Sat, Feb 18, 2012


THE IRISH PUB, says the Lonely Planet travel guide, is the country’s number-one attraction. Yet it is also doomed, according to leading food writer John McKenna. Health campaigners have its products in their cross-hairs, but the truth is that many of us are increasingly indifferent to its long-standing charms.

It isn’t all that long since the pub held a society in thrall. Birthday, Communion and funeral ceremonies would eventually make their way to its darkened interiors. Family members would be despatched to drag reluctant drinkers out of their locals. Early risers joined all-nighters for a pint on the way to work. People boasted about being locked into small, dank rooms for the night with a set of beer taps.

Now pubs are closing at a rate of one every two days – more than 1,100 since 2005. Their decline has frequently been cited as yet another example of rural decay, but pubs in all areas, and of all types, are calling time.

Only last week, some of Dublin’s trendiest watering-holes – the Odeon, Pod and Crawdaddy on Harcourt Street – closed their doors, as did the downstairs venue at the Lower Deck in Portobello. North of the Liffey, the traditional “12 apostles” pub crawl from DCU to the city centre is now reduced to 10 after a brace of bars on the route – the Red Windmill and the Botanic House – failed to reopen after Christmas.

The capital’s publicans are now begging for business. “Dublin Does Fridays,” runs the promotional slogan on their latest campaign, with more than a touch of desperation in its call for Dubliners to “prove we’re the most sociable city in the world”. Cut-price promotions and other enticements are the norm, and pub quizzes and comedy nights multiply to pad out the week.

Many of the remaining pubs are shut for half the week.

Chains such as Thomas Read and Capital Bars have been hit hard. Though some of their venues are still trading or have been sold, Capital Bars had a receiver appointed in 2009, and Thomas Read went into voluntary liquidation the same year.

“The biggest publicans in the country today are the receivers,” comments barrister and licensing law expert Constance Cassidy.

VARIOUS REASONS have been put forward for the collapse of the sector. For much of the past decade, publicans griped about the smoking ban and changes to drink-driving laws. Yet these changes took place some time ago – the smoking ban was introduced in 2004 and the first changes to drink-driving laws date back to the introduction of random breath testing in 2003.

Others say something wider is happening – a radical change in the way we live and, in particular, how we spend our leisure time. “There seems to be a fundamental lifestyle change going on here,” says Mary Lambkin, professor of marketing at the UCD Quinn school of business and the author of several studies on the drinks industry. “As people got richer and more sophisticated they weren’t prepared to sit in a dirty pub any more. Young people in particular wanted newer, brighter, more modern places to meet in.”

“It’s easy to blame the smoking ban or drink-driving laws, but they’re not the problem,” says Conor Kenny of Conor Kenny Associates, consultants to the pub and hotel trade. “The greatest tragedy about pubs is that they have become irrelevant to a generation.”

Lambkin likens the situation to a shopper returning to the drabness of a local haberdashery after visiting the glitz of a new mall. “Consumers are now well travelled and well educated, and they’re not going to spend their lives watching an auld fella in a cloth cap holding up the bar in a dingy local.”

While recognising the importance of pubs for tourism as well as the existence of good bars, she is unrelenting in her critique. “There are still nondescript pubs with nothing special to recommend them. Many, with their dark, dingy interiors and grubby counters, look like they haven’t been done up since 1954. These places are not going to survive the recession and they probably don’t deserve to survive.”

Publicans see the changes as much cultural as economic. “People were cash-rich and time-poor; now they’re cash-poor and still time-poor,” says Padraig Cribben, chief executive of the Vintners’ Federation of Ireland, which represents 4,500 country publicans.

He says it’s not worth some of his members’ time to open off-peak. “It has gone part-time, a bit like farming 20 years ago. Some pubs are staying closed until eight in the evening, or until Wednesday comes around.”

Geraldine Lynch, a second-generation publican who runs the Cuckoo’s Nest in Tallaght, has seen weekday bar trade fall by two-thirds as a result of the recession and other factors. But at least this was predictable and could be handled through tighter management.

Then something alarming started happening; the weekend started shrinking. “In my day, the weekend started on a Thursday evening, but the recession saw that off,” she says. “Then Friday started to go. People stopped coming in after work, or they’d come in for one and disappear.” It was a case of TGIF, RIP.

Lynch sees customers with ever-busier lives, for whom Saturday is increasingly their single treat of the week. Saturday morning might be allocated to family activities or a run, so Friday is now a stay-at-home night.

EARLIER THIS MONTH , a receiver took control of Colman Byrne’s pub in Ballaghaderreen, Co Roscommon, ending Byrne’s six-year struggle to make the business pay. Byrne built the Lir Cafe Bar on the site of his family’s former pub in 2006, well after the smoking ban and drink-driving laws were implemented.

Business ticked along for a few years before going into a tailspin for a number of reasons. The recession and emigration were factors, but there were also objections to late-night licences from neighbours, killing the crucial Saturday night trade.

But along with the economic factors, Byrne spotted the same cultural shift remarked upon by others. “That element of Irish character – sociability – is slowly dying out. People are not doing that same social thing that they used to.”

In place of regulars communing at the bar about local matters, Byrne says his customers were more likely to be “young people who got hammered at home on cheap vodka and beer”. Some who did make it to the pub would arrive with naggins of spirits taped to their thighs.

Immigration has also had an impact on patterns of alcohol consumption, says Lambkin. “The immigrant community has not embraced Irish pub culture as much as a socialising at home tendency, including a preference for different alcohol products.” She points out that sales of vodka, for example, have risen significantly.

Conor Kenny also queries our self-image as sociable and company-loving. “The generation from 26 down is completely different from what went before.”

The result, he says, is a generation with little appetite for a quiet evening spent sitting in the one place in a quiet pub. They work hard, drink hard and go out at a time when their parents might have been returning home to their beds, according to Kenny.

As a result, the pubs weathering the recession best include late-night venues. In Dublin, Copper Face Jacks nightclub made a profit of €7.5 million last year; the Bailey reopened last October after spending €200,000 on a revamp; and the Pod complex nearby is set to reopen as another nightclub.

Kenny has followed the ups and downs of the trade for several decades, having previously worked for the Irish Pub Company, which was largely responsible for selling an ersatz version of the Irish pub around the world. In his work as a consultant, he delivers home truths that sometimes run counter to received wisdom.

People often think of alcohol as a social drug, but as he points out: “You don’t have to be with people to drink.” Home drinking is as likely to be solitary as much as sociable, says Kenny.

This is the other big change affecting the pub sector. The consumption of alcohol has dropped by about one-fifth in a decade, but it still plays a central part in Irish life. The problem for publicans is that more and more drink is being consumed at home, and not in licensed premises. According to research by DCU economist Tony Foley for the Drinks Industry Group Ireland, a decade ago, up to 80 per cent of drink was sold in the on-trade (pubs and other venues); today, it accounts for less than half of all sales.

Vintners say the abolition of the groceries order in 2006 triggered this change. Freed from the ban on below-cost invoicing, supermarkets turned into drink warehouses, using alcohol as a loss-leader to tempt shoppers through the door. “There was an explosion in availability and a collapse in price,” says Donall O’Keefe, chief executive of the Licensed Vintners’ Association, which represents Dublin publicans.

Constance Cassidy, who has specialised in licensing law for more than 20 years, says: “In the beginning, it was all about pubs; now, my business is mostly about off-licences.”

Irish licensing law is a complex beast but one fundamental rule applies; you have to extinguish an existing licence before you can create a new one. This means that if a convenience store owner in central Dublin wants to sell beer, they have to get hold of an existing licence, mostly likely that of a dying rural pub.

UNLIKE TAXI licences, the market for pub licences hasn’t completely collapsed; a licence still costs €65,000-85,000, because it can be converted into an off-licence. This cost acts as a significant barrier to entry and is another reason why so few new pubs are opening.

The job of a publican has changed greatly from the days when someone could be warming a seat in the Dáil backbenches as well as holding court behind the bar counter. The vast majority of pubs are still family-run, one-bar operations, but the introduction of longer licensing hours forced many owners to employ more staff rather than keeping it in the family.

“I don’t work as hard as Mum and Dad did when they opened this place after getting married,” says Geraldine Lynch, whose parents raised six children in the rooms above the Cuckoo’s Nest.

The recession has seen many pubs cut back their opening hours and reduce staff. “As business has contracted, we’re more hands-on again. We’re constantly minding costs, and the family is picking up the slack,” says Lynch.

So while the pub was once a well-defined institution, with a central place in the community, today its purpose has been lost. Kenny says the challenge for publicans is to make themselves relevant again. “It’s all about reinvention, about looking after the basics. Pubs have become poor at creating a market, about emphasising points of difference. During the Celtic Tiger, money was easy, and they forgot how to go out and sell to their customers.”

“Blaming the Government won’t do. Governments don’t run pubs; publicans do,” he adds. “Price isn’t a factor. It was always dearer to buy drink in a pub. People will go there if it’s relevant to them.”

Lambkin foresees further closures and a wave of consolidation as an economic version of “survival of the fittest” plays itself out. “Every town has well-known pubs that stand out. It’s still a viable business for the good ones and they will survive.”

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New negative equity mortgage will cost homeowners their trackers -

By Charlie Weston Personal Finance Editor

Thursday February 16 2012

A NEW type of mortgage that will allow those trapped in negative equity to move home will see them lose their tracker.

The so-called "negative equity mortgages" should be made available by all banks, experts said last night.

And there were calls for those who manage to secure the new type of product to be allowed to keep their good-value tracker mortgages.

Bank of Ireland and Permanent TSB are the only two banks who have been cleared by the Central Bank to offer the new type of home loan.

But both confirmed they will not allow those taking on any new mortgage, which has negative equity debt tacked on to it from a previous property, to retain their trackers.

However, experts said the new type of mortgage product has the potential to help revive the depressed property market.

It will allow homeowners who have good earnings prospects to sell up their current homes, and take some of the negative equity debt on to a new mortgage.

It should prove attractive to those who need to move.

Broker body, the Professional Insurance Brokers Association (PIBA), said the new loan arrangements should now be made available by all lenders.

Rachel Doyle of PIBA said: "A lot of people would be willing to trade up if they had the facility to do so. All lenders should be allowed to offer this option to those who are in a financial situation where they can afford to trade up."

But she warned that people considering such a product would be likely to end up losing their valuable tracker mortgage.

"Banks should allow those on trackers to bring the rate with them or, alternatively, they should discount the new mortgage to take into account the fact that the mortgage holder is forfeiting the tracker," she said.

Bank of Ireland and Permanent TSB have said that negative equity mortgages will not be generally available to customers.

The Central Bank has said that any bank that wishes to provide negative equity mortgages must enter into discussions with them.

It said that such products must be based on customer affordability and were likely to be offered to a small number of customers.

Limits are set to be placed on the amount of negative equity that can be carried on to the new mortgage from the old mortgage and the original house must be sold before moving onto the next one.

- Charlie Weston Personal Finance Editor

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NAMA architect fears agency’s pursuit of debts is “not sufficient” · Business ETC - That's good...coming from Bacon himself!!

THE ECONOMIST who is credited with ‘inventing’ the National Asset Management Agency has expressed fears that the agency does not have a “sufficient” desire to recoup the full value of its loans.

Peter Bacon told RTÉ’s Prime Time that NAMA’s mission had crept from being one of taking an active social role, to one of merely seeking the return of its original investment on each loan.

NAMA has acquired over 11,500 loans from Irish banks, paying €30.5 billion for loans which had a nominal value of €72.3 billion – but Bacon fears the agency will now be happy to recoup its own €30.5 billion investment, and not the whole value of each loan.

“That certainly is not sufficient, because that capital injection to the banks is part of the cost to the Irish taxpayer,” Bacon said.

“It’s national asset management – it’s asset management, not debt collection – and I think that culture of debt collection risks costing the Irish taxpayer a great deal.”

Bacon said the reason NAMA had come under the aegis of the National Treasury Management Agency was because of the latter agency’s access to capital markets, and because of its own credibility on the international stage.

“That is not being used by NAMA,” Bacon said. “That’s what it was put there for.”

The economist further suggested that the agency could be taking a more active role in trying to offload some of its overseas property assets in order to mitigate the burden on the taxpayer.

Although the Irish property market remained flat, because of the presence of distressed sellers and the short supply of credit to prospective buyers, similar downward pressures were not present overseas.

Bacon also said reports on NAMA’s operating costs, which amount to around €242m a year – or close to €1 million a day – were “missing the point” given the size of the agency’s operations

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Developers insist €30m retail project will not lead to ‘ghost’ units in town | Irish Examiner

Monday, February 20, 2012

A proposed €30 million retail development will not impact on the commercial heart of a county town, it has been claimed.

And developers of the plan insist it will not compete with, or lead to the long-term vacancy of retail units in Ennis.

The claims are made in an appeal lodged to An Bord Pleanála on behalf of Michael Lynch Ltd against Ennis Town Council’s decision to refuse planning permission last month on a number of grounds.

The planned retail development on the southern fringes of the town is to provide 300 jobs during the construction phase and between 180 and 200 jobs when operational.

The council refused planning permission after the proposal encountered opposition from businesses in Ennis, with the Ennis Chamber of Commerce and independent retailers’ organisation, RGDATA leading the opposition.

An appeal lodged by Michael Lynch Ltd says "the subject site represents an important strategic development for Ennis".

It says: "When all aspects are taken into account, the subject lands, alongside the appropriately scaled retail development, represents the optimum balance for the enhancement of family food shopping in Ennis.

Furthermore, the company said its consultants discovered in October 2011 there were 42 vacant units in Ennis.

However, the appeal adds: "Ennis does have vacant units but it has also experienced a dynamic turnover of units in the past couple of years with new businesses opening their doors."

The company has also requested an oral hearing into the appeal.

The appeal states: "The proposal accords with national retail policy as the format of development conforms with the broad definition of a district centre and is of a scale subordinate to the town centre.

"Importantly, the project does not have the scale or variety to be an alternative retail destination to Ennis town centre.

"The entire thesis of the project from conception was to provide a retail development that adds to the Ennis retail offer in a positive manner without detracting from the inherent attraction of Ennis town centre.

"In all material respects, the proposed development provides a key opportunity for Ennis to capitalise on a strategic and under-utilised brown field site on the southern entry to the town centre."

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Monday, February 13, 2012

Interest relief change set to benefit 270,000 homeowners | Irish Examiner

Thursday, February 09, 2012

At least 270,000 homeowners are set to see their mortgage interest payments fall.

Finance Minister Michael Noonan suggested that prices in the property market could be bottoming out as he unveiled incentives for first-time buyers.

First-time buyers who bought during the boom and those who buy homes this year will benefit.

Mortgage interest relief will be raised to 30% for first-time buyers who purchased between 2004 and 2008. This is expected to benefit 270,000 purchasers.

First-time buyers who make the leap this year will still be entitled to 25% in mortgage interest relief, with an extension of that measure.

Revealing the Finance Bill as part of this year’s budget measures, Mr Noonan said: "What we’re trying to do in the budget is incentivise people to purchase in 2012.

"That seems to me like the kind of incentive that might work, especially if you’re coming to the bottom of the property market. I don’t know whether we’re at the bottom or not.

"If you look at actuarial figures, the replacement cost of houses now is either equal to or slightly higher than the market price. There’s a fundamental rule. If the bricks and mortar and building costs of a house is now higher than the actual price of the house on the market, things are bottoming out."

The further relief for first time buyers who bought during the boom was promised by Fine Gael ahead of the general election.

Mortgage holders will qualify for the increased rate of relief if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in the period 2004 to 2008

"The estate agents say there’s interest and people in other professions say the market price of houses is now about or slightly lower than the replacement cost of houses, in Dublin in particular," said Mr Noonan.

The minister said there had been delays on updating computer systems to process mortgage interest relief payments. Homeowners would receive retrospective payments though over the coming weeks as systems were fixed, he said.

The changes also mean that those who bought in Dec 2008 but did not make their first mortgage interest repayment until 2009 will qualify for the increased relief. Also, those who bought in Dec 2003 and made their first interest repayment in 2004 will also qualify for the increased relief.

There are different amounts of relief for those who purchased homes during the boom, depending on the year. Amounts of relief available range from €450 to €750 in a year for a single person. A married couple claiming relief will be entitled to amounts between €900 and €2,000, under the measures.

Non-first-time buyers who take out qualifying loans in 2012 will receive relief at a rate of 15%.

Days from eviction

The first family to switch from holding a mortgage on their home to renting it under a new scheme were "within days" of being evicted when the deal was struck, it has emerged.

The family, based in Dublin, will now rent the home they previously owned but which then became the subject of a repossession order from the bank after building up mortgage arrears.

The family came to be renting the property after being identified by the New Beginning group as fitting the criteria for the scheme, which was first outlined last November as a recommendation of the Keane report on mortgage arrears.

Founding member David Hall said: "They were in a situation where they were to be evicted within days."

Instead, under the scheme, voluntary housing association Cluid bought the property at an agreed price from the bank and the family is paying rent on an ability-to-pay basis.

New Beginning has said it knows of as many as 120 other families who would be interested in availing of the scheme, while Housing Minister Jan O’Sullivan’s department has said another 90 families might be suitable for consideration.

Anyone seeking to rent their home must agree to the voluntary repossession of their home after the lending institution has deemed their mortgage position to be unsustainable.

The family must also be eligible for social housing while the property must be valued at less than €220,000. Cluid, as the voluntary, not-for-profit housing association, must then reach agreement with the bank, allowing the bank or lender to effectively cut their losses on the property.

The rent is then based on a means-tested basis, so Cluid will not rent a six bedroom property when just two people are living there, for example, while the rental rate rises or falls depending on the individual’s circumstances.

Nick Sheward of Cluid said the association would consider buying properties at "a fair market price" and that the current pilot project was being monitored and was being rolled out to other areas.

— Noel Baker

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Stamp duty on farm land falls to 2% - Irish Examiner per @Conorkane1974

Thursday, February 09, 2012

A reduction in stamp duty on agricultural land from 6% to 2% should help stimulate the market for farming land, Minister for Agriculture and Food Simon Coveney said.

The Finance Bill provides for the rate of just 1% stamp duty on transfers to close relatives until the end of 2014.

"This change will substantially reduce the stamp duty payable on transfers of farm land by gift or by sale," said Mr Coveney.

"It should stimulate a stagnant land market — currently only 0.5% of total agricultural land is offered for sale annually.

"It will also promote inter-generational transfer, with the cost of lifetime transfer to transferees who do not qualify for the young trained farmer stamp duty relief reduced considerably."

The IFA described measures in the Finance Bill to enable farmers to offset increases in carbon taxes as "insufficient and unworkable".

IFA president John Bryan said there was a clear commitment given in the Programme for Government that farm diesel would be exempt from any further increases in the carbon tax.

However, Mr Coveney said the proposals were consistent with the commitment in the Programme for Government on carbon tax:

"Farmers will be allowed a double income tax deduction in respect of the increased costs arising from the change in carbon tax [the carbon tax is to increase by €5 per tonne, the equivalent of 1.6c per litre of agricultural diesel]."

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Rents rising despite fall in house prices - The Irish Times


THE SUPPLY of rental properties has fallen and rents are on the rise despite a continuing fall in house prices, according to the latest report from property rental website

Average national rents for 2011 were down by 0.7 per cent. However, January 2012 has seen a marginal 0.4 per cent increase on the same month last year, putting rents at almost the same level as in December 2009.

The number of properties available has fallen by 5.7 per cent in 2011, primarily in Dublin, where the number of properties available to rent has fallen by almost 1,000 over the year. Overall, the supply of rental properties is at a 3½-year low.

Minister for Social Protection Joan Burton said the failure of rents to fall in line with house prices supported her decision to cut social welfare rent supplement.

Ms Burton wants to save €22 million from her department’s annual €503 million social welfare rent bill.

Writing the introduction to the report, published today, Ms Burton said the maximum rent limits set by the department for supplement recipients were too high based on market averages.

She said in most parts of the country her department was paying more than 100 per cent of the average rent when it should be paying less as averages included “penthouses” and detached residences. “Once these are excluded, and focusing on availability, there is scope for reductions for all categories, including Dublin.”

She said rent supplement was distorting rents nationally as evidenced by the stabilisation of prices and had acted as a “floor” for landlords in dealing with rent supplement tenants and non-supplemented tenants alike.

“It is essential, therefore, that State support for rents are kept under review, reflect current market conditions and do not distort the market in a way that could increase rent prices for others, such as low-paid workers and students.”

Daft.ieeconomist Ronan Lyons said a direct link between the reduction in the number of properties available for rent and the failure of rents to fall could not be made. “It’s not really a case of cause and effect; the fall in the number of properties to rent has mainly been in Dublin and to some extent the other cities, but supply is much the same in the rest of the country.”

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From boom to bust: what the Central Bank report found - The Irish Times - Wed, Feb 08, 2012


NEW GUIDELINES issued by the Central Bank to the lending institutions to ensure that lessons are learned from the banking crisis and the property crash have gone virtually unnoticed since they were published in the run-up to Christmas.

The report was highly critical of the way some valuations were carried out during the property boom and warned that the Central Bank would in future be scrutinising how new guidelines were being implemented as part of its ongoing supervisory role.

The State’s supervisory bank did not challenge the valuation principles set down in the chartered surveyors’ Red Book but noted that, in many cases, the “terms of engagement with a valuer” had either been overlooked, omitted or totally disregarded during the boom.

The Central Bank reported that poor valuation instructions were a contributing factor to the level of property losses by banks. Vague instructions provided inaccurate valuations and therefore inaccurate assessments of risk at the time of underwriting.

During the busiest period of the development boom, certain valuation practices were accepted by banks that involved significant conflict of interest. Many valuations utilised by lending institutions were informal, either recorded conversations with the valuer, short notes from “drive-by assessments” or desktop research.

The report also identified weaknesses in the appointment, utilisation and performance review of valuer panels by the banks. Some valuers did not have the appropriate experience, qualification and professional indemnity insurance for the particular assignment.

During the lending boom there was increased reliance on informal valuations by the credit institutions. These were utilised as if they were full valuations. There was also inadequate training of bankers on how to interpret valuation reports and their importance in credit risk assessment.

The Central Bank said that in some instances the lending staff may have been motivated to obtain a valuation that supported the price paid and the funding requirement rather than to support a proper risk assessment of the loan. In some development loan valuation reports, the valuation reflected the projected value at a future completion.

Some lenders interpreted this future value as the current actual value of the project, thereby assuming that zoning and planning were granted, construction completed according to budget and sales would be ultimately achieved in full.

The Central Bank recommended that in future banks should give written instructions to valuers, reminding them that their duty of care was to the credit institution. Valuers should also be required to disclose any material involvement in a property. Where the value of a loan to be advanced was more than €25 million, the bank should seek a full Red Book valuation from more than one valuer.

Banks should avoid having one valuer doing more than, say, 33 per cent of all valuations. Credit institutions should report any concerns in relation to non-ethical behaviour, including unrealistic valuations, to the Royal Institute of Chartered Surveyors

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Lessons learned in the property crash - The Irish Times

Central Bank report highlights systemic failings and identifies areas where improvements can be made in the valuation process, writes EOIN McDERMOTT 

AFTER THE banking crisis of 2008/9, the Central Bank undertook to make lending institutions aware of the lessons that can be learned from that episode. Last December, as part of this process, it published a document entitled Valuation Processes in the Banking Crisis – Lessons Learned – Guiding the Future.

There has been little reaction to date, but in my opinion the document is to be welcomed by all who are involved in commissioning, undertaking or interpreting property valuations for the purposes of secured lending.

The document is written for banks, credit unions and building societies, and offers guidance to ensure that credit risk management standards are appropriate for future demands. It identifies a number of failings by lending institutions and makes recommendations as to how these failings can be rectified. It also raises a number of questions that property valuers may wish to consider.

The following are, to my mind, the main findings of the report:

The Central Bank recognises the Royal Institution of Chartered Surveyors (RICS) asset valuation standards (colloquially known as the Red Book) as being consistent with the rules of international valuation standards. The Red Book contains mandatory rules, best practice guidance and related commentary for all chartered surveyors involved in asset valuations. It was first published in the 1970s, against a background of a property crash and a recession in the UK and has been updated many times since then. While the Red Book is the global valuation standard, the Irish standard is currently being finalised by the Society of Chartered Surveyors Ireland in association with the RICS.

Lenders should seek Red Book valuations from suitably qualified valuers when considering applications for loans or reviewing existing loans. In particular, the practice of using informal valuations is highlighted and criticised. These often took the form of a phone call to the original valuer and a question as to whether the property had increased or decreased since the previous valuation and if so, by how much in general percentage terms. The Central Bank report notes that in the past many valuation instructions were given verbally and were often vague. Compliance with Red Book procedures will require the valuer to confirm instructions in writing, which should minimise the potential for error.

Lenders and valuers are reminded that that there should be no conflicts of interest in preparing valuations. The Red Book states that the lender may specify that the valuer should have no previous, current or anticipated involvement with the borrower or property to be valued (or any other party connected with a transaction). The Central Bank recommendation is along similar lines.

The Central Bank urges lenders to ensure that their valuation panels are consistently monitored to ensure that the valuers have the skill set and experience to undertake particular assignments. It notes that panel appointees often had insufficient qualifications, may not have had appropriate experience for particular assignments and sometimes carried no professional indemnity insurance. The Central Bank also recommends that no one firm of valuers undertake more than 33 per cent of a lending institutions valuations. It also said that where the value of the loan was in excess of €25m, at least two full Red Book valuations should be sought. In addition, loans over € 3m or 5 per cent of the lender’s own funds should be reviewed by an independent valuer every three years. Revised valuations should also be sought where there has been a material change to the property.

The report recommends that banks should ensure that their own staff have sufficient training and experience to be able to properly assess valuation reports. It also says that relationship managers and credit staff should be specifically trained in property valuation methods.

The document is written by the Central Bank for lenders and must be viewed in that light. How will the service providers, the property valuers, react?

I believe that the reaction will be very positive. The report addresses many of the issues that valuers have attempted to raise previously, although these have tended to fall upon deaf ears. It has highlighted systemic failings and identified areas where improvements can be made in a straightforward and easily understood approach. The Central Bank is to be congratulated on the production of this report.

Eoin McDermott is a chartered surveyor and director of valuations and professional services at the property asset management consultancy, W K Nowlan and Associates. He is a past chairman of the valuation professional group of the Society of Chartered Surveyors Ireland.

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Lloyds takes control of Heuston complex - The Irish Times - Sat, Feb 11, 2012


LLOYDS BANKING Group took control of the high-profile Heuston South Quarter complex in Dublin late yesterday following an agreement with the developer.

The bank appointed Paul McCann of Grant Thornton as receiver to the complex, made up of apartments, a hotel, offices and retail premises, on foot of a €257 million debt secured against the property.

Heuston South Quarter is close to Heuston railway station to the west of the city centre. Commercial tenants include internet giant AOL and grocer Superquinn, which operates a store there. The site was bought and developed at a total cost of €285 million.

Mr McCann took over as receiver to the two companies that own the property, Rhatigan Commercial Developments and Shoreview, late yesterday. The companies agreed that Lloyds should take control of the property during discussions held over the last few days. It is understood that Mr McCann will appoint a property manager to the business shortly.

Rhatigan Commercial Developments and Shoreview are joint ventures involving businessman and builder Padraic Rhatigan and private investors recruited by stockbroking firm Goodbody.

Mr Rhatigan’s other business, the JJ Rhatigan construction group, is not affected by the receivership. It was the development’s main building contractor but did not invest in Heuston South Quarter. It is understood that the building company’s accounts provided for some outstanding payments due from the project a number of years ago and its involvement ended there.

JJ Rhatigan is trading profitably and recently won projects worth €46 million from NUI Galway to construct research buildings. It is doing similar work for Athlone Institute of Technology and a number of State bodies.

Heuston South Quarter’s developers bought the site in 2005 from telecoms group Eircom and the Office of Public Works, the State’s main property manager, for €80 million. The exchequer made €45 million from the deal.

Eircom’s headquarters still occupy part of the quarter, but it is not involved in the receivership.

The properties under Mr McCann’s control are 340 apartments, the retail units and the Brunel office block, a distinctive building with a curved front at the western end of the site, part of which is home to AOL. The developers put €25 million equity into the project.

It is understood that Mr Rhatigan put up €5 million personally and investors recruited through Goodbody put up €20 million. The bank provided the rest.

The development companies had pre-sale agreements for the Brunel building and half the apartments before work started, but the property crash intervened and the purchasers were unable to complete the deals.

Late last year, a potential buyer for the entire site emerged, but the bank turned the offer down

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Google set to open first shop in Dublin | Irish Examiner

Google is set to open its first standalone retail shop at its European headquarters in Dublin.

The Google Store would sell unspecified Google merchandise, the company’s Irish unit stated in a planning application.

Located in the Montevetro office block on Barrow St, the store would have about 123sq m of space including an added mezzanine floor designed to draw attention from passersby.

Retail may be a new front in Google’s competition with Apple, whose 361 stores have fuelled sales of iPods, iPhones and iPad tablet computers. Google, the world’s biggest maker of smartphone operating software, is in the process of buying handset maker Motorola Mobility Holdings for $12.5bn (€9.5bn) to help it compete with Apple’s phones and Microsoft’s mobile software.

"While we do have the option to open retail space, we are examining all potential uses," the company said yesterday. "No final decision has been taken."

Google opened a store inside a London branch of Currys and PC World, as a trial for selling laptops running its Chromebook operating system.

The company also offers merchandise online, featuring merchandise such as baby bibs and notebooks with the Google logo.

The planning application, prepared by consultants John Spain Associates for Google Ireland, was approved by Dublin City Council on Jan 23. The document also describes a staff swimming pool in an area designed for use as a restaurant.

Google’s Dublin office is its largest location outside of the US, according to the filing. It purchased the Montevetro site in April for about €100m from Real Estate Opportunities.

Google will have more than 3,000 employees in the Dublin area after it expands into the building and refurbishes its existing headquarters across the street, according to the document.

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NAMA expects to get up to €500m in fresh security for loans | Irish Examiner

National Asset Management Agency chairman Frank Daly expects the agency to receive up to €500m in fresh security for its loans on foot of talks with debtors.

Mr Daly unveiled this projection to those at last night’s annual dinner of the Dublin Chamber of Commerce. He said the agency had made progress in obtaining charges over debtor assets that were previously unencumbered and reversing transfers of assets by debtors to family members.

Mr Daly said: "We have been granted charges over assets with an aggregate value of €221m and have succeeded in reversing asset transfers totalling €160m. We expect that, once this process is concluded, the aggregate value of these unpledged assets may prove to be in the region of €500m." He rejected criticisms the agency had been slow to make decisions and said he had developed a thick skin since chairing "one of the most controversial bodies ever established here".

Mr Daly said: "We have made 6,000 individual credit decisions since the end of March 2010 and the average turnaround time for credit decisions is less than six days. Clearly there are outliers but this is understandable if the decision being made is complex and there is a lot of taxpayers’ money at risk.

He said NAMA recognised the role it must play as a catalyst for renewing sustainable activity in the Irish property market, through residential and commercial property initiatives.

Mr Daly said NAMA plans to acquire property assets, on an arm’s length basis, from receivers (or from debtors who cede secured property directly to NAMA) and will package them in various combinations which can then be monetised through sale to investors.

Meanwhile, the Government has appointed International Fund for Ireland chairman Denis Rooney, Blackstone’s Gerry Murphy and former HSBC chief executive Michael Geoghegan as the three-man NAMA advisory board.

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Ronald Quinlan: Trophy house price crash a symptom of ailing market -

Sunday February 12 2012

THERE'S a detached house in Carrickmines Wood in Foxrock, south Dublin, for sale for €675,000.

Perhaps that doesn't mean much or anything to you. But for anyone with an interest in the property market, Carrickmines Wood should ring a very loud bell, for it was there in 1999 that Ireland's first £1m (€1.27m) homes were sold.

It was the talk of the nation at the time with most people thinking it was pure madness. But it wasn't quite as mad as the €2m-plus the very same houses were selling for just five years later.

Fast-forward to today and prices in the exclusive Foxrock development have fallen far below their 1999 levels to reflect what a potential buyer might be willing to pay as opposed to how much they could once borrow far too easily to meet vendors' increasingly unreasonable demands.

Not that Carrickmines Wood or even the meteoric rise above and subsequent fall from its 1999 prices is representative of the Irish housing market generally.

But it does go some way towards illustrating what economists describe as the irrational exuberance that gripped the nation in the boom years, and how that exuberance has now been replaced by what some believe to be an irrational fear of investing in bricks and mortar, or even buying a family home.

Such generalisations aren't sufficient, however, in describing just what is happening right now.

Where once there was a housing market on a national level, there are now numerous locations where transactions are taking place while other areas have ground to a standstill completely.

Accounting for these discrepancies are a number of factors including property type, price, location, availability of mortgage credit, the present and future employment prospects of potential buyers and the country's overall economic circumstances and outlook.

Taken together, these factors have seen the quiet emergence of 'micro' property markets within certain Dublin postal codes such as Dublin 4, 6, 9 and 18, as well as pockets within the capital's commuter counties of Wicklow, Kildare and Meath. Further afield, transactions are taking place in the more desirable areas close to the cities of Cork and Galway.

But just who is buying houses in these areas and just how are they paying for them in the absence of mortgage lending by the country's banks?

According to estate agents, as many as one-in-four transactions now taking place is for cash. The funds for these purchases are coming from a variety of sources. In some cases, buyers are coming to the table with cash derived from the sale of family homes that they may have sold at or near the height of the boom which they then held on to in the belief that prices had peaked and were set to fall. Relying on that belief, these buyers have held out and waited for houses in the most desirable areas to come within their reach before putting their money down.

These cash-rich buyers aren't alone when it comes to snapping up houses in the country's best locations. Other buyers are coming from the ranks of the legal and accounting professions whose day to day to work sees them tidying up the mess from the dying days of the Celtic Tiger.

Top-tier lawyers and accountants not already burned by involvement in property syndicates headed up by the likes of former Revenue Commissioner turned financier Derek Quinlan currently enjoy huge earning power thanks to the seemingly endless stream of work arising from disputes in the Commercial Court, and companies going into examinership, receivership and liquidation.

In the last month alone, figures published in the Insolvency Journal showed four firms going out of business every day.

With even middle-ranking commercial lawyers commanding several hundred euro per hour in fees and receivers charging thousands to manage and sell assets, Ireland's economic downfall has produced a plethora of high net worth individuals who can put cash down for the home of their dreams.

Not that every house is being sold to a legal eagle or a bean counter. There are of course many buyers drawn from the ranks of those who refused to buy into the boom, and who chose instead to wait for the return of some semblance of normality to property prices before taking the plunge. Many of this cohort simply worked and saved in the manner that the Irish used to do before the era of cheap credit took hold. And while their uncommon sense may well infuriate those who fell under the banks' spell during the bubble years, they have deservedly benefited from their decision to keep their feet off the property ladder until now.

But what of the property market outside of the country's most sought-after locations, and more significantly beneath the financial firepower of the select coterie who can afford it?

Well that's a very different story.

Here a potent mix of unemployment, job insecurity for those still in employment, rising taxes, falling incomes and a lack of mortgage credit has depressed house sales and prices to the point where the rental market has now begun to suffer from a shortage of supply.

Indeed, only last Thursday, figures released by property website revealed how the number of properties now available for rent has hit a three-year low. Interpreting those findings, Daft's economist Ronan Lyons said they suggested what he called an underlying demand from a build-up of first-time buyers.

While Mr Lyons may well have a valid point, it is one that's difficult to prove given the dearth of funding being made available by the country's banks for mortgages as they battle to repair their balance sheets.

With prices continuing to fall at rates of up to 20 per cent per annum, it's unlikely that battered lenders will be willing to loosen their purse strings anytime soon for fear that the properties against which mortgages are secured will be in negative equity almost immediately.

Potential buyers, meanwhile, will continue to stay on the sidelines, deterred by the banks' requirement for ever bigger deposits, fear of negative equity, unemployment and in many cases their future in this country.

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Monday, February 6, 2012

Swedish property bought for €285m by Irish lawyer sold for 10 cent

A landmark Swedish property bought for €285 million by Vico Capital, the investment company headed by embattled lawyer Brian O'Donnell, has been sold by a bank for a kroner, or around 10 cent.

Vico bought the Fatburen office block in Stockholm at the height of the property boom, but its Swedish lender, Aareal Bank, sold the building at a private auction last summer after an issue over repayments arose.

Vico is now understood to be seeking damages of €64 million from the bank, and has filed a case against Aareal in the Swedish courts.

In a statement to this newspaper, the bank said the claim was "unfounded", and denied claims in the Swedish press that the buyer of the Fatburen building was a subsidiary of the bank.

A spokesman for the bank said: "Aareal Bank redeemed company shares pledged in its favour by way of a private auction which took place at the end of June 2011.

"At the end of December, Aareal Bank was served with a suit from the former shareholder, Fatburen Investments AG, claiming compensation from the bank at the civil court in Stockholm for having redeemed the shares. Aareal Bank considers the asserted claim to be unfounded.

"The pledging of company shares is a usual collateral in the lending market. The realisation of such collateral by way of a private auction is also a customary procedure in Sweden. Aareal Bank does not hold any interest in the company which now holds the shares. Personnel overlaps between the two companies do not exist either."

Attempts to contact Vico were unsuccessful.

According to reports in Sweden, Vico had been in negotiations with Aareal to meet its loan obligations through the sale of part of the building, which is home to the Swedish tax authorities. Vico also said it would take legal action against estate agents Catella, which advised the bank on the sale.

In December, the High Court in Dublin ordered O'Donnell and his wife, Dr Mary Pat O'Donnell, and companies with which they are associated, to repay €71.5 million in property loans and guarantees to Bank of Ireland following litigation with the lender.

Vico and its associated companies had borrowings of €886 million in July 2010 and valued its properties in Ireland, Britain, the US and Sweden at more than €1 billion. Last week it was reported that Vico sold a landmark office block in Washington DC for $155 million (€118 million), $17.5 million less than it was bought for in 2008.

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Nama treating developers like dirt, says furious Agar -

ONE of Ireland's top property developers has launched an unprecedented attack on the National Asset Management Agency (Nama) and accused the State's 'bad bank' of treating developers "like a piece of dirt on their shoe".

David Agar, who was behind the €340m Beacon Court scheme and Google's €75m state-of-the-art data centre, said he had decided to speak out because he believes "Nama will not be happy until every developer is banished from the country".

Mr Agar described himself as "emotionally frustrated" at the way in which the State agency is "driving developers into the ground".

The multi-millionaire property developer, against whom Nama has moved this week to take control of a "land-bank" development site with debts of €77m, said this weekend: "Nama is treating developers in a disgraceful manner.

"If they feel they are not capable of doing a good job, then why didn't they send in all the receivers on day one and have the show on the road by now?

"I am extremely frustrated and angry at how developers are being treated in this country. Nama will not be happy until every developer in this country is living in a three-bed semi-detached house and driving a Ford Cortina. And soon enough we will be able to pay for it out of our petty cash."

He went on: "Who are these people who thought we were experts at our jobs and now think we are a piece of dirt on their shoe? And how have the receivers suddenly become the new experts?

"I am emotionally frustrated at the way I have been treated. I have walked on water to prove a point to Nama and will continue to do so for the receiver.

"And I will continue to work with the receiver in every way possible while I am still in this country.

"But I predict that there will be no rise in the value of property in this country for at least 15 years.

"Nama is driving developers into the ground. It is sad to see such enterprising people being forced to go abroad for their skills to be appreciated, rather than encouraging them here, where they will be able to rebuild the country.

"Developers are being banished out of here in the name of the taxpayer. They are being forced and threatened into a state of silence but it is time to speak out. Nama will be proven to be the biggest mistake we ever made."

Nama has appointed Aiden Murphy, a partner at accountancy firm Horwath Bastow Charleton, as receiver over the assets of three companies linked to the developer: Dasnoc, Heratt and Sammark.

According to accounts filed with the Companies' Office, the firms have combined debts of around €77m following the purchase of greenfield development land in counties Dublin and Wicklow.

The land has not been developed, which means that realising value from the sites will be "slow and difficult", according to Mr Murphy.

Nama is understood to have become the main lender to the three firms after buying the debts from AIB, as part of the transfer of toxic debt to the State's bad bank.

Mr Agar was a major property player during the boom.

In addition to the sites now controlled by Nama, he was also behind the €340m Beacon Court scheme and the Profile Park industrial estate in south Dublin, home to Google's €75m state-of-the-art data centre.

He was also behind the single largest profit on a property development site in this country, bought from Bank Of Ireland for €13m and sold just 15 months later for €90m.

Unlike many of the new entrants who came unstuck through wildly speculative projects, Mr Agar had adopted a conservative business model and focussed on business and industrial park developments in the greater Dublin region.

Just before the economy hit the skids, he began to develop the hugely ambitious €1bn Profile Park business and trade park in Grangecastle in west Dublin. It is set to become Ireland's data cluster.

He was also instrumental in attracting investment from Google, with the search engine giant deciding to establish a €75m data centre in his South Dublin complex.

Major US technology group Digital Realty Trust is to expand its operations in Ireland at Agar's park. The move is seen as a collosal win for Ireland Inc, which is desperately trying to attract multinationals to these shores to help kickstart the economy and cut the lengthy dole queues.

Paying compliment to what he called "courageous" developers who he said have built "spectacular developments such as the Dundrum town centre and the Ritz Carlton Hotel, Mr Agar was keen to point out: "I have worked for free for three years for NAMA despite not having any personal guarantees on my loans."


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Now is the time to get training for a mortgage -

House hunters who are planning to take advantage of the extra mortgage relief that's available for the next 11 months need to get in training. Like marathon runners they need to prepare months in advance and indeed in some cases almost a year in advance if they wish to convince a bank to give them a mortgage.

On the plus side they may have a slightly better chance of getting a mortgage this year as recently the two big Irish banks signalled plans to provide more mortgages to home buyers in 2012. The banks have also signalled that they are more likely to lend to those buying houses rather than flats and those buying homes rather than investors.

In 2011 as many as 13,000 mortgages are estimated to have been approved, of which first time buyers got about 6,500 mortgages and those moving houses got practically all of the remainder.

This year, with prices down by between 10 and 19pc over the last 12 months, there could be a further 1,300 mortgages available. If the banks devote more of their funds to mortgages, that figure could rise closer to 15,000 mortgages given out before the mortgage tax relief deadline closes next December.

But the prospect of increased availability is no reason for buyers to relax on their lifestyle training. According to mortgage advisor Michael Dowling, banks now scrutinise the spending and savings records of applicants for months prior to their application.

He has come across people who were refused mortgages even though they were borrowing less than 92pc of the value of the house and had their deposit saved up. However when the bank went over their credit card records they found that the applicant had missed a couple of payments over the previous 12 months. So the home hunter was refused the mortgage because the bank manager had a doubt over the applicant's ability to keep up the repayments.

So if you splashed out over the Christmas and haven't paid off the credit card bills then make sure that you do so as soon as possible. Any house hunter who is delaying payment with a view to splashing out again on Valentine's Day should think again. Not only do banks look at the bad credit record, but they can also scrutinise how mortgage applicants spend their money. A bit like Angela Merkel and her gang of three, the Irish banks also want to know that they are lending their money to someone who is willing to undergo a bit of sacrifice in order to make sure they can save money to repay the bank. In effect it's not even enough to keep out of the red but a buyer must be substantially in the black.

Gone too are the days when children who got a present of a house deposit from their parents could soft soap a bank manager into agreeing a mortgage of more than 92pc of the value of the house. Children must also show they have a record of saving consistently each month.

Banks may treat kindly those applicants who are paying rents on time and thus showing both the ability and the discipline to keep up the monthly repayments. So parents who are sheltering their kids from the perils of the rental market need to think again. Such parents are not doing them any favours if this means that the kids are spending a substantial portion of the their earnings on holidays and fast cars. So for some, spending on rent may not altogether be dead money after all if it teaches the kids the discipline of keeping up their monthly mortgage payments and other household outgoings. So parents may be doing them a double favour by charging them rent and putting it in a deposit account.

House hunters who are offered a new job with extra cash should also be wary of taking up the offer if they also want to buy a house this year. Dowling cites a person who was head hunted for a new job but found that the bank refused him a mortgage because he had been in the job only six months at the time of the application.

So if you are planning to buy before next December's tax deadline be sure to get those ducks in a row as soon as possible and visit a mortgage advisor to see what other bruises in your financial track record need a bit of toning.

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