Banking inquiry as illuminating as an unwashed spud
Billed as one of the showcase weeks of the Oireachtas banking inquiry, the process failed to deliver. Jean Claude Trichet picked his way through the path of Oireachtas inquiry questions with the footwork of a mountain goat.
Few punches were landed as the former ECB governor delivered a pretty strong performance. Having the questions in advance definitely made it easier.
This was also a week when the first banking heavyweights took to the stand. The approach taken in the sessions was predictable. It focussed on how much money people like Eugene Sheehy and Brian Goggin were paid at AIB and Bank of Ireland, and then followed up with detailed questioning about where they were on the night of the bank guarantee.
We learned little about how such highly paid and experienced bankers could race their banks at such speed towards a cliff. Surely the purpose of the inquiry is to understand how this happened?
It took Bank of Ireland 200 years to build up a loan book of €100bn and just the following four years to turn it into €200bn. Property lending at AIB increased by €76bn between 2002 and 2008. Total exposure to property went from 18pc of loans to 37pc of loans with an extra €22bn of loans for land and development.
How could that level of risk have been allowed to happen and what were the processes within the bank that encouraged, facilitated and drove that? We are left with no real sense of how that happened.
The pattern is simply that Sheehy and Goggin say: "I called it wrong. I am sorry and take responsibility for that. But no, I wasn't overpaid. I got what everybody else was getting."
And that's it. About as illuminating an unwashed spud.
Eugene Sheehy was a career banker. Yet, he plunged AIB into spending €216m on a Bulgarian property bank, not in 2005 or 2006, but in 2008 - eight months after the credit crunch began. The bank was later sold for €100,000.
After the guarantee in 2008, Sheehy said he would rather "die than raise equity". In February 2009, after the State's first injection of €3.5bn into AIB, Sheehy told a newspaper: "By and large, I think the State got a pretty good deal." The State's €3.5bn injection "puts us in a position where we can absorb a lot of pain". The bill later came to €20bn. This wasn't simply getting it wrong, it was inhabiting a parallel universe.
Did AIB, Bank of Ireland and the others race towards a cliff in a single day, or was it a particular year or month?
What do internal documents tell us about the level of awareness they had about the risks they were taking, any dissenting voices and how were they handled?
What role did a bonus culture play throughout these organisations and how did it work?
So far, the inquiry looks like delivering little insight, but just a series of qualified "mea culpas".
Honohan leaves a legacy of independence
Patrick Honohan is heading off a year early. At 65, he has done a good job in rescuing the credibility of the bank and leaves it in a better, but still imperfect, state.
His biggest positive legacy will be how he steered the banking sector through a period of incredible upheaval and the fact that he stood up to banks, government and, at times, popular public opinion. His new mortgage lending rules, for example, were unpopular but necessary.
Central Bank investigations into legacy issues of the crisis continue to falter. We cannot be sure about how much the culture of the Central Bank has really changed. A raft of new people came in from the outside like a healthy new broom. Many of them have left.
The Central Bank keeps getting bigger, but is it getting better? Privately, people who have worked there will tell you that it hasn't changed enough. There is still too much writing letters, instead of picking up the phone to bankers to resolve issues. A lack of confrontation or invasive approach was one of the reasons for its past failings.
Another outsider would be a welcome replacement.
Revenue may get a nice slice of Apple
Good news from Apple Inc during the week. It wasn't about iWatch or iPhone sales, or even the share price. No, it is the fact the US tech giant has warned in an SEC filing about the cost of losing the EU Commission investigation into its Irish tax affairs. A finding against Ireland could result in a material financial hit to the company.
Estimates suggest that if Ireland loses the case, the Exchequer here would be forced to recoup around $2.5bn from Apple in back taxes. A tough job but somebody would have to do it. It's a pretty good consolation prize for losing the battle.
In theory, if Ireland were found to have given an illegal state aid to Apple, it would damage our reputation. However, Barack Obama and others have already done that by calling us a tax haven. Because Michael Noonan has changed the law, arrangements with Apple - currently being investigated - now look historical and would not be offered to a company today. So the cost of this reputational damage is not so clear.
Secondly, the EU finding would not necessarily drive other foreign multinationals out of Ireland. They are fully aware of our tax structures and the changes to the double Irish and tax residency rules. A finding against Apple might not be a reason to leave.
Thirdly, Apple isn't going anywhere. It is committing to hundreds of millions of euro in new investment in a data centre, and it employs thousands of people here. The company has $150bn in cash and a $2.5bn tax bill would be just two weeks' profits.
Back in the 1990s, when the deal was done, Apple's revenues were under $10bn per year and its profits were virtually zero. The $2.5bn would be small change to Apple today, but a significant windfall for Ireland.
The Irish Government and Apple will vehemently argue they have no case to answer. But losing might not be the end of the world for either.
Dalata knows the real value of Ballsbridge
Dalata Hotel Group chief executive Pat McCann sounds like he wants to attach the company to whoever buys the Ballsbridge and Clyde Court hotel sites. Dalata has been running the two hotels since 2013 and even wanted to buy a 25pc stake with an option to increase. That deal fell through.
As the sites go up for sale and the new owner turns it into apartments, Dalata will lose those leases on several hundred very lucrative hotel rooms in Dublin 2.
Accounts for the companies that own the hotels suggest that Dalata is paying around €3.5m to €3.8m per year to rent them. With the hotel sector going so well, and revenue and profit per room running high in city hotels, this looks like a pretty good deal for Dalata.
McCann knows better than anybody else what the value of a hotel in that site can be, so why not join up with whoever buys the site, which includes planning permission for a hotel.
In the meantime, Dalata can make hay while the sun shines on Ballsbridge.
Sunday Indo Business