What it says in the papers: business pages
Here are the front page business stories you need to know this morning:
***Greece has closed its banks for a week to prevent worried savers from emptying their accounts following the collapse of bailout talks with the troika.
The dramatic move capped a weekend that saw Greece lurch closer to default on an IMF payment tomorrow and even a potential exit from the euro next week.
Greek banks will stay closed until after next Sunday’s referendum on the terms of the next bailout, officials said.
***Rising interest rates after years of loose monetary policy will pose a fresh risk to banks’ ability to absorb losses using capital buffers, the Bank for International Settlements said in its annual report, published yesterday.
A prolonged period of ultra-low rates would further weaken the financial sector and squeeze banks’ profitability, but a “normalisation” of borrowing costs would reverse the debt-fuelled inflation of asset prices and hit banks’ own loss-absorbing equity capital, the BIS said.
“Just as falling yields have supported asset valuation gains in recent years, an eventual normalisation would generate losses...Banks’ equity capital would shrink.”
***Staff at Irish Water are asking the Labour Relations Commission (LRC) to intervene in the ongoing row with management at the company over unpaid bonuses.
The LRC will host conciliation talks between the workers’ group of unions and management at the semi-state company, who have both agreed to attend the discussions on July 13.
Staff at Irish Water, who can earn bonuses of up to 15pc through the “performance related awards (PRA) scheme” in place at the company, have yet to receive any incremental bonus payments.
***Losses at Clerys decreased by more than €2m in its last full year of trading, the Irish Times reports.
According to the newspaper accounts for the company that ran the department store, OSC Operations Ltd, show that it made a loss of €1.1m in the year to the end of January of this year compared to a loss of €3.1m in the 18 month period to the start of February 2014.
OSC Operations repaid just under €1.4m of loans to group companies in the period to the end of January. Clerys was recently liquidated after being sold for €29 million to Natrium Ltd.
***Over €1bn of taxable income was sheltered from tax by various property reliefs during 2012 and 2013, the Irish Times reports.
In a written response to Fianna Fail finance spokesman Michael McGrath, Finance Minister Michael Noonan said that €575m was sheltered in 2012, while the provisional figure for 2013 ame to €450m. Figures for 2014 were not available.
Mr Noonan also said that the Revenue Commissioners collected more than €22m over the same two years from the 5pc property relief surcharge introduced at the start of 2012.
***Irish hotelier John Fitzpatrick plans to spend $2m on his two hotels in New York under his latest refurbishment platform, the Irish Times reports.
The cost will include $500,000 to be spent on installing high definition smart televisions in almost 250 rooms at the Fitzpatrick Manhattan and the Fitzpatrick Grand Central hotels during the summer.
Mr Fitzpatrick has also spent $150,000 on upgrading his hotels so that they have high speed wi-fi which will allow guests to run up to five devices at once.
***Top officials in the defense forces have warned that the military is at a serious risk of “not being fit for purpose due to the large amount of high-level personnel snapped up by private companies, including the likes of Aldi, the Irish Examiner reports.
According to the newspaper the Representative Association of Commissioned Officers has warned that nearly 100 officers have resigned in the last two years which has contributed to the Defence Forces being critically short of specialist officers such as pilots and bomb disposal experts.
It said that many have left due to the Department of Defence’s refusal to honour conditions of service such as previously agreed terms for promotions. This has caused many to quit the military when they are then recruited by private companies including Aldi, which has head-hunted about 18 to date.
***Former Taoiseach Brian Cowen will tell the Banking Inquiry that his decisions as Finance Minister were “prudent and cautious”.
Mr Cowen is ready to deliver a robust defence of his four-year term as Finance Minister from 2004 to 2008 – a period some analysts argue paved the way for the banking and economic crash in autumn 2008.
The former Fianna Fáil leader utterly rejects this view and will point to a slew of national and international analyses of the Irish economy at that time which helped inform his management decisions. He will also reject claims that he “overruled” his finance minister, Brian Lenihan, over the bank guarantee.
***The former head of the International Monetary Fund Ashoka Mody has said that decision making by the IMF, the European Central Bank and European governments in their dealings with Greece have been “catastrophic”.
Speaking to the Irish Examiner after the ECB announced a freeze on the amount of emergency liquidity assistance to be provided to Greek banks, Mr Mody accused the European Governments and Greece’s creditors of taking huge risks with the markets.
“We are now collectively, not just the Greeks, in a black hole. Those who think they are insulated from this, may continue to feel that for a few days. But the feeling that this will not spread well beyond Greece is at best wishful thinking, at worst it is denial,” Mr Mody said.