What it says in the papers: business pages
Here are the business stories you need to know about this morning:
***Cutting the interest rate for standard variable mortgages (SVR) will be good for both the banks and borrowers, a global ratings agency has suggested.
Fitch said that if banks reduced the costs of home loans, the move would make the debt more affordable for the borrower to service, reduce the stress levels on those homeowners, and increase the chance that the lenders would get their money back.
Some 300,000 people on variable rates have been paying among the highest mortgage interest rates in the eurozone. Banks have come under political pressure to cut their rates and Fitch’s analysis will put pressure on the banks to cut their rates even further.
***Gold sank unexpectedly overnight yesterday, the lowest in more than five years, amid prospects for higher US rates and after China said it held less metal in reserves than some analysts had expected.
In about 15 minutes during Asian trading hours yesterday, prices fell the most in two years, sliding below key levels watched by investors who use chart patterns to trade.
While gold later recovered some of the losses, it’s still at a five-year low and headed for a sixth day of declines.
***Shares in Tullow Oil slumped to their lowest level in nearly a decade yesterday, after the company warned it would have to restrict oil production at its most important field because of a technical problem.
In a stock exchange announcement, the Irish-led FTSE 250 firm said it has a problem with how it stores gas at its Jubilee Field of the coast of Ghana. As a result of that problem, oil production has been “constrained” to 65.000 barrels per day (BOPD).
That announcement sparked a fresh sell-off in Tullow, sending the battered share price down as low as 262.5 pence in London – its lowest level since January 2006.
***Demands for extra spending have not been matched by corresponding tax increases that will pay for them, according to the chairman of the national economic dialogue.
In a report on talks with 140 figures from businesses, trade unions and farming Prof Alan Barrett of the Economic and Social Research Institute said that several delegates highlighted the need to establish whether Ireland is a high or low tax State.
According to the Irish Times he said: “We need to discuss what level of public services we want in combination with a discussion on what the overall tax take should be”.
***Bank of Ireland has become the first Irish bank to achieve an investment rating since the financial crisis after ratings agency Standard and Poor’s upgraded its view on several Irish lenders.
The main factor in the organisation raising its outlook for the sector was an increase in net investment margins. S&P now believes that the banking sector is set for a period of low-risk appetite in a competitive landscape.
BoI was upgraded one notch to BBB-/A-3, the lowest investment grade, while AIB and Permanent TSb also saw their long term ratings increase one notch each.
***Irish-owned bookstore chain Eason is sinking €3m into a revamp of its flagship store on Dublin’s O’Connell Street, the Irish Times reports.
The project will include a new giftware department on the first floor as well as the chain’s new entry into areas such as cake decorating materials, according to the newspaper.
The chain, which has annual sales of about €225m, is looking for new ways to boost its revenue after emerging from a painful five year restructuring.
***The proposed increase in minimum wage could actually leave workers with less net take home pay due to an anomaly created by the abolition of the €100 weekly PRSI allowance three years ago, the Irish Examiner reports.
Fianna Fail finance spokesman Michael McGrath said that the pay rise would likely have a knock on effect on those earning just above the minimum wage that would see them hundreds of euros out of pocket.
Those earning just under €9.40 an hour, the cut off point at which PSRI is paid, whose income rose to €9.60 would then have to pay €749 more PSRI and reduce their take home pay by €436 a year.
***Bord na Mona is currently in talks with a number of developers about building a pilot solar farm in Offaly next year, the Irish Examiner reports.
Speaking to the newspaper after the company’s AGM yesterday, chief executive Mike Quinn said that the firm’s solar energy plans are currently at a “very early stage” but added that the business will definitely build solar farms on its land banks in the midlands in the coming years.
Bord na Mona is reported to have been in talks with the largest solar energy company in the UK, Lighthouse renewable Energy, which is thought to be looking to spend €500m to develop solar farms in Ireland.
***Petroceltic has ruled out a shareholder vote on a proposed bond issue, with which the company is planning on raising $175m (€160m) by the end of the month.
Swiss activist investor Worldview, which owns nearly 30pc of Petroceltic, had called for an EGM on the matter.
Yesterday the investment company also called for a second EGM to table a resolution that, if passed, would force Petroceltic to seek approval from shareholders for any material asset disposals that represent 25pc or more of the Irish company’s revenues, profits, or oil and gas reserves.