News Archives - Page 5 of 281 - Pat Carroll PCCO - Chartered Accountants & Tax Advisors

Bank regulator launches toughest ever bank stress tests

The European Union’s banking watchdog has launched its toughest stress test of lenders to check on their resilience to very low interest rates, trade tensions and Britain failing to get an EU trade deal after Brexit.

The European Banking Authority (EBA) said its fifth test since the aftermath of the financial crisis a decade ago, when governments bailed out lenders, covers 51 banks, including four from Britain even though the country leaves the bloc on Friday.

The “scenarios” of theoretical shocks being tested include for the first time interest rates remaining at ultra-low levels, with accompanying poor economic growth, weak inflation and crashes in markets for assets like real estate.

Banks have long complained about ultra low central bank rates introduced after the financial crisis hitting profitability.

Trade tensions between the United States and China have rattled markets in recent months.

Bank by bank results for the test, which the EBA says is the toughest yet, will be published by July 31, though with no pass or fail mark.

Earlier tests sought to bolster capital levels across the sector and with this task largely accomplished, the exercise is used by regulators to decide if capital “add ons” are needed to cover vulnerabilities and risks specific to each bank.

The EBA was under pressure to toughen up the 2020 test after the European Court of Auditors, responsible for evaluating EU policy, said last year that the previous exercise in 2018 was too mild, spared economically weaker countries, and saw no lender failing.

The 4.3% theoretical fall in EU economic growth over two years is still less than the drop in U.S. growth seen in the harshest scenario used by the Federal Reserve in its test of American banks.

UK lenders Barclays, HSBC, Lloyds and Royal Bank of Scotland are included because Britain has an 11-month business-as-usual transition period after Brexit Day on Friday until December, during which all EU rules continue to apply.

The Bank of England will conduct its own test of UK lenders this year and has said the banking sector already holds enough capital.

Britain and the EU will use the transition period to try and negotiate a trade deal by January 2021, with the bloc saying on Friday the talks would be tough.

“The adverse scenario encompasses a wide range of macroeconomic risks potentially stemming from Brexit,” the EBA said.

The test does not cover the impact of climate change on banks, but the EBA will separately collect data on climate-related exposures from a group of lenders and disclose aggregated findings in its regular reports on risks in the sector.

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Household wealth soars by 80% since 2013 on rising property prices – CSO

Household wealth has recovered by over 80% since 2013, mainly due to the recovery in the property market. 

The finding is contained in the Household Finance and Consumption Survey published by the Central Statistics Office today.   

The survey also finds a wide disparity in wealth between the top 10% and bottom 10% of households. 

There are 1.8 million households in Ireland and this major survey of 5,000 households paints a picture of how wealth is distributed across our society. 

The wealthiest 10% have a net wealth of greater than €835,000, while the least wealthy 10% have a net wealth of less than €1,000.

The CSO said 69.5% of households own their own homes. 

It said that the median, or mid-point, of the value of households’ main property has risen from €150,000 in 2013 to €250,000 in 2018.

This has led to an overall 80.2% increase in median net household wealth – on paper at least.

The CSO explained that the median value is obtained by arranging all households in ascending order from the smallest to the largest value and then selecting the middle value. 

In terms of wealth, the median provides a truer reflection of the average household as it is not influenced by extreme values, it added. 

The net wealth of households that own their own home is €287,300 compared to renters’ whose net wealth averages just €5,900.

The survey found that households with the highest net wealth are found in the eastern and midlands region. 

It also found that just over two-thirds (67.6%) of the wealthiest households received a substantial gift or inheritance while just over 10% of the poorest households did. 

Today’s survey also reveals that 31.9% of all homeowners with a mortgage were in negative equity in 2013, but that rate fell substantially to stand at 3.9% in 2018.

But 51.5% of all households had some form of debt in 2018, a slight decrease from 56.8% in 2013. 

Overall, the median value of debt for households with any form of debt is €42,300, down over €20,000 from the 2013 value of €63,000.

The CSO also said that the proportion of “credit constrained households” dropped from 14.7% to 7.9% between 2013 and 2018. 

A credit-constrained household is one that applied for credit and was turned down or received less credit than the amount applied for.

It also includes households that had considered applying for credit but did not do so due to the perception that the application would be turned down.

And more than nine out of every ten households (94.3%) own some form of financial asset, including savings, shares and voluntary pensions). 

For households that own financial assets the median value is €7,900 up from €6,300 in 2013, the CSO said.

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Euro zone GDP falls short of expectations, inflation picks up

Euro zone economic growth was slower than expected in the last three months of 2019, a first estimate showed today. 

Meanwhile, inflation in January picked up in line with expectations thanks to a jump in prices of food, alcohol and tobacco and energy. 

The European Union’s statistics office Eurostat said gross domestic product in the 19 countries sharing the euro rose 0.1% quarter-on-quarter for a 1% year-on-year gain. 

Economists polled by Reuters had expected a 0.2% quarterly and a 1.1% annual increase. 

Separately, Eurostat said consumer prices fell 1.0% month-on-month in January for a 1.4% year-on-year rise, accelerating from a 1.3% rate in December and 1.0% in November. 

However, the pick-up in headline price growth was mainly due to a jump in the volatile prices of food, alcohol and tobacco which rose 2.2% year-on-year. Energy prices were also up 1.8%. 

Without unprocessed food and energy, what the European Central Bank calls core inflation, prices grew 1.3% year-on-year, decelerating from 1.4% in December. 

An even narrower inflation measure watched by many market economists also excluding alcohol and tobacco prices which can move due to excise tax changes, decelerated even more to 1.1% from 1.3% in December in year-on-year terms. 

The ECB wants to keep inflation below but close to 2% over the medium term.

But it has been struggling for years to spur faster price growth despite its programme of government bond buying on the market to inject more cash into the economy.

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Nearly 140 governments agree to launch rewrite of international tax rules

Nearly 140 governments have agreed to launch a rewrite of decades-old cross-border tax rules for the digital age over the coming months, the Organisation for Economic Cooperation said after talks this week in Paris. 

The rise of Amazon, Facebook and Google has strained existing rules to breaking point because big tech companies can book profits in low-tax countries no matter where their customers are located. 

Tax officials from 137 governments agreed at a meeting in Paris to launch negotiations on new rules for where tax should be paid and what share of profit should be taxed when big digital and other consumer-facing businesses do not have a physical presence in the market, the OECD said. 

A growing number of countries are preparing national digital taxes in the absence of a major redrafting of current rules, despite threats from Washington to hit them with retaliatory trade tariffs because it sees such levies as discriminatory against big US tech groups. 

“It’s moving fast because what is at stake is a massive trade war,” OECD head of tax policy Pascal Saint-Amans told journalists in Paris.

“This is what we see on a daily basis with the interaction between France and the US and with the interaction between the US and the countries that have said they would launch digital services taxes,” he added. 

France and the US agreed a fragile truce last week to set aside a row over France’s digital tax until the end of the year to allow time for the redrafting of international tax rules. 

A US proposal to let companies choose whether to subject themselves to current rules or the future arrangements received next to no support at the meeting, but countries agreed to not deal with it until the technical work was done, Saint-Amans said.

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First time buyers continue to drive mortgage market

First time buyer activity continued to drive the mortgage market in the final three months of last year, new figures from the Banking & Payments Federation Ireland show.

A total of 12,259 mortgages to the value of almost €2.77 billion were drawn down in the three months from October to December.

This represented an increase of 1.2% in volume and 5% in value on the same time in 2018.  

First-time buyers remained the single largest segment by volume (52%) and by value (53%),  the figures show.

The BPFI said that total drawdown activity for last year came to €9.5 billion – the highest drawdown value in over a decade.

Meanwhile, a total of 2,964 mortgages were approved in December, with first time buyers making up 51.7% of the total volume. Mover purchasers accounted for 25.7%.

The number of mortgages approved rose by 1.9% year-on-year but fell by 29.1% compared with the previous month.  

The BPFI said this reflects the seasonal trends generally seen at that time of the year,  noting that in the past four years, approval volumes have dropped by 28-30% between November and December. 

Mortgages approved in December were valued at €696m. First time buyers accounted for 52% of these mortgages while mover purchasers made up 29.4%.

The value of mortgage approvals rose by 6.1% year-on-year but fell by 27.5% month-on-month – again due to seasonal factors, the BPFI said.

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Stocks recover from coronavirus scares

European stock markets rebounded on Tuesday, having lost ground in recent sessions due to fears of the impact of China’s coronavirus outbreak.

Banks and luxury goods companies led the recovery, while leisure and airline stocks also clawed back losses as investors took the view that the right steps were being taken to contain the illness.


The Iseq managed a 0.3 per cent climb, a rise that underperformed the major European indices. Building materials company CRH recovered only 0.1 per cent of its 2 per cent Monday slip to finish at €34.27.

Ryanair posted a more convincing gain, closing up 0.85 per cent at €14.84, while packaging company Smurfit Kappa was up 0.8 per cent at €31.72.

It was a good day for Glanbia, which advanced 0.9 per cent to €10.90, while another food group, Kerry, was up 0.3 per cent at €116.90.

Bank of Ireland advanced 1.75 per cent to €4.53. There were few fallers, but among them were AIB, down 0.4 per cent at €2.64, and Kingspan, down 0.2 per cent at €56.80.


The FTSE 100 added 0.9 per cent, while the mid-cap FTSE 250 gained 0.6 per cent. Virgin Money UK rallied 4 per cent after reporting higher loan book growth, while Irn-Bru maker AG Barr soared 15.4 per cent on the mid-cap stock’s best day since October 2005 after it forecast annual profit to be at the top end of the current market view.

Shares in Unilever, AstraZeneca and Reckitt Benckiser all climbed 2 per cent as sterling dipped on concerns about Britain’s future relationship with the EU, and ahead of a Bank of England meeting this week.

InterContinental Hotels, one of the stocks that had declined since the outbreak of the coronavirus, gained 3.1 per cent.

Among smaller stocks, tourism and insurance firm Saga advanced 7.6 per cent after saying it was on track to meet its annual profit outlook, despite a one-off charge related to the collapse of Thomas Cook last year.

London-listed Irish food company Greencore fell 1 per cent as it highlighted the challenging trading environment in an update to investors.


Luxury goods makers LVMH, Kering and Moncler, all of which derive a chunk of their demand from China, rose after sliding more than 3 per cent on Monday. Bolstered also by a recovery on Wall Street, the Stoxx 600 ended up 0.8 per cent. Along with most other major country indices, the benchmark index had lost more than 2 per cent in the previous session.

Capping gains were shares of Europe’s most valuable technology company SAP, which dropped 2.1 per cent as some analysts pointed to its slowing cloud revenue growth. Philips slipped 2.1 per cent after the Dutch health technology company’s quarterly sales fell short of estimates.

In Germany, the Dax rose 0.9 per cent, while the French Cac 40 finished 1.1 per cent higher.


Wall Street rose as gains in technology and financial sectors helped major indexes recover from their worst sell-off in about four months.

Corporate results were mixed, with US industrial giant 3M sliding 5.7 per cent in early trading after it forecast 2020 profit below expectations as it faced sluggish demand in Asia. Pfizer fell 3.9 per cent after the drugmaker reported a lower-than-expected quarterly profit.

Harley-Davidson dropped 3.75 per cent after capping its fifth straight annual US sales drop with quarterly profit that missed estimates.

Shares in Xerox jumped 5.4 per cent after it forecast 2020 profit above Wall Street expectations, while defence giant Lockheed Martin rose after reporting sales that beat analysts’ estimates.

The market also awaited quarterly earnings from companies including Apple and Starbucks. Investors will keep a close watch on Apple’s earnings amid concerns of a disruption in iPhone production in China.

–– Additional reporting: Reuters

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Construction sector under Celtic Tiger levels of pressure – report

The construction sector is under Celtic Tiger levels of pressure and is in danger of overheating, according to a new report from construction consultants Mitchell McDermott.

The report says 30,000 additional construction workers are required if housing targets are to be met.

It says construction output grew by 12% last year, but the number of workers only grew by 4%.

Paul Mitchell, one of the authors of the report, predicted output would increase by a further 10% this year to over €25bn.

“Output is outstripping our already constrained supply chain, and this is a worrying trend going forward. In fact, demand is at levels of constraint similar to the Celtic Tiger, especially in Dublin,” he said.

The report says that, while the number of housing unit completions has gone from around 6,000 in 2018 to 21,500 last year, this is still far below the 34,000 that most commentators say the market requires.

It adds that last year saw a huge surge in the number of planning permissions for apartments, with 19,000 in all.

However, Mr Mitchell points out that construction of many of the units has yet to begin and when it does, they will take another 18-24 months to complete.

According to the report, hotel and office construction are reaching full capacity and while there is still strong demand for student accommodation, the latter is facing viability and affordability issues.

The report also says the market is being stoked by cost inflation, which is rising at 5-6% per year.

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Dublin world’s 17th most congested city – report

A new report shows that Dublin is the 17th most congested city in the world, with motorists spending an average of eight days and 21 hours sitting in peak traffic a year.

The TomTom Traffic Index examines the traffic situation in 416 cities in 57 countries around the world. 

The report showed that congestion has risen across the country, especially in Dublin where waiting times have gone up by 3% in the last year. 

TomTom noted that Dublin’s ten most congested roads include Parnell Road / Grove Road, Dalymount / North Circular Road, Dorset Street Lower, Bothar Mhuirfean, Clanbrassil Street Upper, Drumcondra Road Upper, King Street North / Bolton Street, Church Street / Church Street Upper, Amiens Street and Harold’s Cross Road.

“High congestion levels can indicate strong economic activity, but they also represent lost time, productivity and potential for Dublin’s workers,” said Stephanie Leonard, Traffic Advisor at TomTom. 

“It’s time for traffic to change and, while plans around congestion charges and new cycle lane networks will help the situation, they can’t come soon enough,” she added.

Meanwhile, Cork is ranked 75th in the world for congestion, but TomTom noted that congestion is set to reduce when the city’s northern ring road is finished in 2027.

Limerick is ranked 118th in the world for congestion.

On a global basis, Bengaluru takes the top spot this year with drivers in the southern Indian city expecting to spend an average of 71% extra travel time stuck in traffic. 

Next in the global rankings are Philippine capital, Manila (71%); Bogota in Colombia (68%) – last year’s most congested city – Mumbai (65%) and Pune, in India (59%). 

Moscow takes the lead in Europe (59%) with Istanbul (55%) coming a close second. Kyiv (53%), Bucharest (52%), and Saint Petersburg (49%) make up the rest of the top five. 

Paris (39%), Rome (38%) and London (38%) ranked in at 14th, 15th and 17th respectively. 

In the US, the top five most congested cities are Los Angeles (42%), New York (37%), San Francisco (36%), San Jose (33%) and Seattle (31%).

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Retail sales rebound in December – CSO

The volume of retail sales increased by 5.8% on an annual basis in December compared to annual growth of 1.4% in November, the Central Statistics Office said today.

Today’s figures show that retail sales volumes rose by 3.6% in December from November, with sales of food, beverages and tobacco; and cars showing the largest increase.

Retail Ireland, the Ibec group that represents the retail sector, has welcomed the continued growth in retail sales.

“Retailers had a broadly positive Christmas with sustained growth across most of the major categories,” said Arnold Dillon, Retail Ireland Director. “The volume of sales is growing significantly faster than the value of retail sales, which means consumers are getting more for their money. Intense competition is keeping prices low. This is good news for the consumer, but it makes for tough trading conditions.

“To safeguard jobs in the sector, the next government must tackle key factors driving up retail costs, including rising commercial rates and insurance premiums,” he said.

The CSO noted that Black Friday sales were included in the reporting period, which covered the five weeks from November 24 to December 28. ‘Black Friday’ had been included in the November reporting period in 2018.

The CSO also said that when volatile car sales are excluded, the volume of retail sales increased by 2.8% in December on a monthly basis while they were up 5% when compared with December 2018.

Today’s CSO figures show that sales of food, beverages and tobacco jumped by 11.7% in December while car sales motored 5.3% higher. 

The figures also show other Retail Sales – which include carpets, games and toys, flowers and plants, pet food and jewellery – fell by 10% while sales of books and newspapers and stationery were down 3% last month.

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EU says member states can ban or restrict high-risk suppliers from their 5G networks

EU countries including Ireland can restrict or ban high-risk 5G vendors from core parts of their telecoms networks, according to new EU guidelines published today.

The move is likely to hurt China’s Huawei but unlikely to appease the United States.

The non-binding recommendations, agreed by the bloc’s 28 countries, seek to tackle cyber-security risks at national and EU level, with concerns mainly focused on Huawei, although the guidelines do not identify any particular country or company.

Huawei welcomed the EU’s decision which it said would enable it to continue participating in Europe’s 5G roll-out.

The United States is worried that 5G dominance is a milestone towards Chinese technological supremacy that could define the geopolitics of the 21st century.

The US and the EU are also concerned about Chinese laws that require companies to assist in national intelligence work.

The EU sees 5G as key to boosting economic growth and competing with the United States and China.

Huawei, the world’s biggest producer of telecoms equipment, competes with Sweden’s Ericsson and Finland’s Nokia.

“Today we are equipping EU member states, telecoms operators and users with the tools to build and protect a European infrastructure with the highest security standards so we all fully benefit from the potential that 5G has to offer,” Europe’s industry chief, Thierry Breton, said in a statement.

The guidelines call on EU countries to assess the risk profile of suppliers on a national or EU level and allow them to exclude high risk suppliers for the core infrastructure.

EU governments are also advised to use several 5G providers rather than depend on one company.

The providers should be assessed on technical and non-technical factors including the risk of interference by state-backed companies.

The Commission said it was ready to bolster the bloc’s 5G cyber-security by using trade defence tools against dumping or foreign subsidies.

EU countries have to implement the guidelines by April and report on their progress by June.

The United States wants the bloc to ban Huawei on fears that its gear could be used by China for spying, allegations rejected by the company.

The EU, however, is hoping a collective approach based on a checklist of technical and non-technical risks and targeted measures will take some of the U.S. pressure off.

“This non-biased and fact-based approach towards 5G security allows Europe to have a more secure and faster 5G network,” Huawei Ireland said in a statement.

“We will continue to work with our stakeholders here including the Department of Communications and Comreg to help Ireland take a positive, evidence-based approach to the European Commission’s recommendation.”

The company added that it had been a trusted partner in Ireland for the past 15 years, is part of Ireland’s digital ecosystem and is fully committed to rolling out 5G across Ireland.

Yesterday, Britain opted to allow Huawei to supply equipment for non-sensitive parts of its 5G network rather than bow to US pressure and ban the company completely.

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