Sunday 25 February 2018

TH€ PUNT: Fighting words leave Elan's management badly bruised

ANY senior members of Elan's management team reading the 'Financial Times' yesterday morning must have choked on their tea. The last thing the company needs in the midst of its battle to fend off a hostile takeover from Royal Pharma is public, angry dissent from influential senior people within the industry, but it has gotten just that.

Former board member Jack Schuler was published in the letter pages, ardently criticising the company's management and its handling of Royalty Pharma's bids.

"In my view, Elan's board and management has very limited experience in doing deals and I believe is not competent to run a business," he wrote.

Mr Schuler implored Elan shareholders to sell the company to the highest bidder, "their only option", and said he had no confidence that chief executive Kelly Martin or other Elan board members would act in the interests of shareholders. Them's fighting words.

Mr Schuler is a veteran of the pharmaceutical industry with more than 30 years' experience.

He joined Elan's board with former Eli Lilly chief executive Vaughn Bryson in 2009 but left in 2010 after the company took legal action against him.

"I joined the Elan board with the hopes of improving Elan's corporate governance, providing some much-needed industry expertise and protecting and preserving the Elan shareholder's interests in the company. Unfortunately, Mr Bryson and I did not accomplish our goals."

Elan's management are no doubt doing their utmost to ensure an image of credibility with shareholders at present, and this latest development will come as a blow.

Bank's wine deal proves a real corker

Talk about liquid assets. A regulatory filing in the US has revealed that banking behemoth Goldman Sachs accepted 15,000 bottles of French wine as collateral for loans to former executive Andrew Cader.

The wines from Burgundy and Bordeaux are reckoned to be worth more than $1m.

Fine "investment grade" wine has beaten the stock market in terms of investment returns in recent years, so it is not as crazy as it sounds.

Still the Punt doubts that our local Credit Union would take too kindly to a loan application secured on what passes for a drinks collection around here which currently runs to some dubious looking berry cider and dust covered bottles of knock-off Creme de Menth.

Still the idea of trading in high end wine is an appealing one. The Punt can see our way to a life stepping in and out of cool cellars, talking terroir and spitting into buckets with the best of them.

Alas it seems the world of high end vino is not immune from scammers. High returns on investment wines have led to claims of fraud and counterfeiting by unscrupulous suppliers, though we're stumped as to how you go about finding that out without drinking away your investment.

KBC Bank move on mortgages welcome news for loan market

THE decision by KBC Bank to lower the amount of money it requires from a home buyer before advancing a mortgage is positive for the lending market.

Headed up here by John Reynolds, with Dara Deering as head of retail, the Belgium-owned lender is effectively sending a message that it is back in the mortgage game here.

Up to now it has required a deposit from first-time buyers and movers of at least 20pc of the value of the property.

That meant that the lender was not an option for most buyers.

But now it has changed to a situation where it requires a deposit of 10pc or less.

This is in keeping with what AIB and Bank of Ireland are doing – the two most active lenders in the mortgage market.

Given that Mr Reynolds is president of the Irish Banking Federation it is fitting that the bank is back mortgage lending here.

And let's not forget that Ms Deering is former chair of the Irish Mortgage Council, part of the Irish Banking Federation.

KBC Bank is also rare among banks here in that it is opening branches. The bank also plans to launch a low-cost current account for consumers, at a time when others are imposing high charges.

The bank clearly sees opportunities in retail banking here, and that is refreshing after five years of banking hell.

Companies large and small should beware the fat finger

IN a previous life, The Punt dabbled in investment banking. We weren't one of those highly caffeinated, alpha-male traders of lore, but we were physically close enough to the breed to recognise the Wall Street stereotype. And yes, the stereotype is very close to reality.

One person who patently did not fill that caricature is an unnamed German bank official, who turned a bank transfer worth €62.40 into a €222m order when he fell asleep at his desk.

According to Agence France-Presse, the official was making the transfer for a client but "fell asleep for an instant, while pushing the number 2 key on the keyboard" – resulting in a transfer of €222,222,222.22.

Details emerged in court this week after the bank fired the official's colleague for letting the mistake slip through. He successfully took a case for unfair dismissal, and has been reinstated in his job.

At first we laughed when we read this story, and scoffed at the chance of something similar happening in the jungles of The City and The Street. Then we thought back to the numerous "fat finger" errors of recent years.

Sleep may not have been involved in the incorrect trade that apparently sparked the so-called Flash Crash of 2010, or the early release of Google's earnings last year, but the effect was the same. Small trades turned into enormous ones, and billions were lost in seconds.

Sometimes there really is little difference between a hedge fund trading floor and a tiny regional bank branch.

Irish Independent

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