Monday 26 September 2016

The Punt: Burn the IMF, says the IMF

Published 22/04/2015 | 02:30

Ashoka Mody
Ashoka Mody

The International Monetary Fund (IMF) is being called on to forgive Greece for some of its bailout loans, by one of the fund's own former senior officials.

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In what looks like developing into a habit for ex-IMF officials, after Ajai Chopra's comments about the European Central Bank (ECB) and Ireland, Ashoka Mody has now written for Bloomberg lambasting the decsion by rescue lenders to increase Greece's debts with new loans rather than allow a default back in 2010.

In his time at the IMF, Mody (below) was its head of mission to Ireland and Germany.

He now argues that the IMF should face up to its role in Greece's predicament.

In 2010 the IMF and European rescue funds opted to lend cash to Greece that allowed the country to repay private bondholders in full but worsened the country's financial situation.

At the time there were calls for a restructuring of the privately held Greek debt, including from members of the IMF board and one-time German central banker Karl Otto Pohl, a key architect of the euro, according to Mody.

When that option was rejected in favour of a bailout it rewarded banks, including in Germany and France that had enabled Greek profligacy, Mody said.

EY makes  Eurozone error

Ernst & Young has had to ask the Department of Finance if the latter could make a correction on the accountancy giant's submission on the new Financial Services Strategy.

It seems that EY made an error in its submission when it inadvertently stated on the online application that being a member of the Eurozone was a "moderate disadvantage" in terms of Ireland's value proposition as a location for international financial services.

The Punt thought, perhaps, that EY was of the view that Ireland's involvement with the Eurozone was hindering its development, at least in terms of the financial industry.

But the accountancy firm confirmed that a "technical error" had occurred when submitting the form and that it had put in a request to have it corrected.

An unfortunate error, then. We all make mistakes.

If not AIB, what next for John?

Where will John Hourican end up next?

Now that he is leaving his €1m-plus job at Bank of Cyprus, the former Royal Bank of Scotland executive wants to stay closer to home and his four children. This means he has limited his ambitions to the British Isles.

The 44-year-old said yesterday that he would consider roles outside of banking. That widens the field a bit. It will also be an interesting test of the upper end of the jobs market in Ireland.

There are not too many €1m-plus jobs knocking around for ex-bankers; even if they have done a good job of turning around a lender like Bank of Cyprus, which passed the European Central Bank's stress tests last year.

Hourican has been something of a lucky general; part of Bank of Cyprus' success is down to the problems in Greece which has encouraged money to flow his way. Still, it was a big task and well executed.

The Establishment has not proved very good at finding new jobs for heavy hitters outside their fields.

Few bankers have been able to carve new careers elsewhere. AIB's David Duffy has stayed inside the industry but had to move country to get anything like the salary a bank chief has come to expect.

Hourican's career has not been without its wrinkles of course. He left Royal Bank of Scotland 's investment banking unit after its 2013 settlement of Libor manipulation allegations. As we said, it will be fascinating to see where he ends up.

Irish Independent

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