CANTILLON:MANAGEMENT AT KBC Bank Ireland are presumably breathing a sigh of relief. The Irish operation failed to tick many boxes in the analysis done by its parent of what should stay and what should go under the restructuring plan approved by Brussels yesterday, but it has avoided the chop due its strong profitability.
Banking in Ireland failed to make the grade in terms of geographic fit and synergy with the now all-important bank assurance business model. But it rang the bell when it came to the crucial risk-return profile, scoring full marks along with bancassurance in the home Belgian market and the so-called CEE-5 (Czech Republic, Slovak Republic, Hungary, Poland and Bulgaria ) .
KBC Ireland accounted for 10 per cent of group profits (€68 million out of €680 million) in the first nine months of the year and this, combined with its reasonably strong market position, seems to have saved it from the chop and it has been put in the “keep and review” category.
It would be comforting to think that the Belgian bank’s 35-year association with Ireland also counted for something, other than just memories of happier times. The lack of any such long-term connection may prove pivotal as the other foreign banks review their presence here.
One of the most recent arrivals, Rabobank, appears to be slowly winding down ACC after its disastrous foray into property lending.
Questions surround another foreign-owned lender, Bank of Scotland (Ireland), now owned by Lloyds. The bank seems to have little interest in further lending and the bank – along with its retail entity, Halifax – seems to be in cold storage, pending the outcome of Lloyds’ strategic review.
Danske, another recent entrant, is understood to be keen to support NIB in the future, though it has incurred big losses on tracker mortgage products and has taken heavy writedowns on its property development loan portfolio.
The foreign-owned banks must do as they must, but it does not bode well for competition in the market.
Welcome Mr Corrigan
The appointment of John Corrigan to succeed Michael Somers as head of the National Treasury Management Agency (NTMA) yesterday got lost in the noise surrounding AIB.
Mr Somers had his fans and his detractors, but it was generally accepted he had the respect of the bond market, which paid dividends earlier this year at the peak of the crisis in the credit markets.
In that regard at least, he has big shoes to fill and, unlike AIB, this is probably a case when the appointment of an insider makes sense. Mr Corrigan has held various roles at the NTMA since 1991, almost since its inception, and hopefully will be able to also play the reputation card as necessary.
TODAY
Kerry Group is due to issue an interim trading statement, while the Organisation for Economic Co-operation and Development is to release its economic outlook with projections for the major economies
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