Friday 15 December 2017

Lender's bond issue on ice as debt markets rocked

Joe Brennan

EBS has put a bond issue slated for this week on ice as the Greek financial crisis plays havoc with global debt markets, according to market sources.

The society raised €1bn last year under the original, two-year state guarantee scheme and a further €1bn in unguaranteed bonds, covered by the group's mortgage book. It also raised a €1bn five-year bond earlier this year under the extended guarantee scheme.

EBS's reliance on short-term funding from the European Central Bank fell to €2.5bn from €3.7bn last year. Chief executive Fergus Murphy said yesterday that the figure has since dipped to €1.8bn.

EBS is set to tell Brussels in its upcoming restructuring plan that it intends to rebuild its net interest margins -- the difference between the rates at which it borrows and lends -- to as high as 1.2pc in time, as it increases mortgage rates and deposit and wholesale rates decrease.

This key margin fell to 0.72pc last year from 0.77pc in 2008.

"The net interest margin will have to move above 1pc, maybe to 1.2pc over the next five years," said Emer Finnan, finance director. Meanwhile, Mr Murphy said that the society's year-long search for a new chairman was coming towards an end.

"We have a preferred candidate," he said, declining to identify the individual.

The former incumbent Mark Moran stepped down along with then-finance director Alan Merriman last May, after the group unveiled its first loss in living memory.

Acting chairman Philip Williamson said yesterday: "Our main objective since the financial crisis began has been to work to stabilise the society, secure our future and ensure that we emerge in good shape to continue delivering for our members."

The transfer of assets to National Asset Management Agency will lower the society's loan-to-deposits ratio to 167.6pc from 175.2pc -- though lenders are under huge pressure from regulators and the international markets to lower this to between 100pc and 125pc.

Irish Independent

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