Wednesday 24 January 2018

Max Doyle: Short view

WHOEVER succeeds in setting the agenda during an election usually prevails, but in Ireland's case the message from the people is clear and unambiguous -- jobs and a future for our children.

These are the basic staples for human motivation and have not changed since the foundation of the State. It has become obvious that however well-intended our banks have become, they simply have no money to lend. No lending, no recovery, no new jobs.

Whether or not you think that Standard & Poor's rating agency (S&P) is credible any more, they have succinctly highlighted the utter dependency that the Irish banking system now has on the taxpayer -- in the eyes of our lenders.

S&P views the Irish banks and the State as the same. If in March new stress tests show that the banks are hiding more problem loans, they will hit Ireland's rating again.

Even in New York, despite a massive overhaul of the US banking system, there is still no finance for new construction in the city, therefore no new construction jobs. Compare this to the Toronto skyline where construction hardly stopped. The reason, of course, is that the Canadian banks did not blow up themselves or their country.

To contend that existing Irish banks or Nama can facilitate our economic recovery is tantamount to an electoral scam.

Money needs to be found to participate in a new bank that at a minimum will fund new homeowners and businesses with no legacy skeletons. This requires careful negotiation with our international creditors and needs to be done by experienced negotiators.

Iceland achieved enormous concessions by understanding its bargaining position, being very well advised and by holding its nerve. It's a long way back for us, we can get there but not without new banks willing to lend new money.

Max Doyle is a principal of Prime Focus Management specialising in investment and turnaround of Irish companies

Sunday Indo Business

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