AIB sell-off poses more questions than answers: AIB chairman Dermot Gleeson pointed to the bank's "bright" future at its agm this week in Cork and spent much of the time defending large payments to past and present executives. Ireland's biggest bank pays well, he said, because top staff may flee elsewhere.
He might well have added that AIB pays well because it can. A €230 million profit on the sale of office blocks and land at its Ballsbridge headquarters comes pretty soon after a €160 million profit on the sale last year of the remainder of the headquarters. Not at all bad - and they're just the exceptionals.
Some issues arise. Sweet as the latest deal is, questions should be asked when a big property lender such as AIB chooses to cash in on its site in one of the wealthiest parts of Dublin. Why is it moving now? Does it think the top of the market is near? And did it decide to avoid the possibility of a lesser profit by selling out as soon as possible? Remember this: it said this month its forecast of 7 per cent growth in house prices was made "more in hope than in confidence".
For the sake of his personal finances, developer Seán Dunne must have more confidence than hope about the market. Not content with splashing out megabucks for the Jurys sites last year, his company Mountbrook Homes is forking out some €200 million of the €377.7 million that AIB receives in this week's deal. Mountbrook said it viewed the price as "good value". It was, if you're comparing the latest transaction with the €84 million per acre Ray Grehan of Glenkerrin Homes paid the OPW for the old UCD veterinary college next to the Jurys site.
These fellows and their lenders have steely nerves - and optimism that is without bounds.
Rearguard action at B of I on free banking
Being big has its advantages but, as Bank of Ireland realised this week, it can also leave you vulnerable to attack.
The State's second-largest retail bank announced yesterday that it was revamping its free banking offering less than six months after unveiling its initial proposal as part of its much-hyped "Changing For You" programme.
The bank initially insisted that its 750,000 current account customers would have to bank online at least three times a quarter and maintain a minimum account balance of €500.
The situation has changed dramatically with competition in the sector ramping up and most of the high street banks presenting existing and prospective customers with some class of free banking - in most cases with fewer strings attached than Bank of Ireland.
The decision by AIB, the largest player in the market, to succumb to the inevitability of free banking - and without the minimum balance requirement at Bank of Ireland - earlier this month, appears to have forced the suits in Baggot Street to review their offering.
Henceforth, customers can avail of free banking either by banking online or by having the €500 minimum balance in their accounts. The move was attributed to "customer feedback". Current Account has no doubt that it was ... feedback by way of disappearing customers.
EC shoots and misses
Everyone remembers the adage, the road to hell is paved with good intentions. Well, the saying can surely be applied to the European Commission this week. For the last few years one of the Commission's more populist campaigns in the sports/business arena has been to break the stranglehold of Sky on the viewing rights to English Premiership matches.
The Commission has argued - rather persuasively - that BSkyB's control of all the matches has reduced choice for viewers and all but eliminated competition for football rights among the major TV companies.
While the Commission's diagnosis is probably spot on, its cure has not really worked as expected. Following pressure, the Premier League has split the 138 matches available into six packages of 23 games each, with no broadcaster able to scoop more than five. Surely this is a good idea that should bring great relief to the long-suffering armchair fan?
Well...er, not really. Analysts reckon that Sky will pay whatever it takes to win five packages. It may even be prepared to pay £2.5 million a game to keep out the likes of NTL and Setanta. Ironically, this means that it will have to recoup even more money from the long-suffering armchair fan by charging higher subscription fees and increased pay-per-view charges.
Maybe those well-intentioned folks in Brussels should take the rest of the year off?
