IE
Editor’s take: Ireland’s sub-prime escape
22 November 2007
Just how unscathed is Ireland likely to be from the credit crunch? Pretty much totally if the sentiments of domestic banks are anything to go by.
While banks in the US and the UK are revealing increasing horrors behind structured credit investments, Irish banks are being defiantly bullish.
Bank of Ireland is the latest to come out with positive results, claiming its “absolutely insignificant” allocations to structured investment vehicles (SIVs), collateralised debt obligations (CDOs), etc, failed to dent first-half profits up 15%.
It also describes its capital markets business as a “strong growth engine” and says there are no “undue risk concentrations” in its ever-growing corporate loan book.
A similar story is on offer elsewhere. A review by the Irish Central Bank says that there are 11 domestic firms with exposure to the sub-prime market, two with direct allocations. The remaining nine have largely invested in residential mortgage backed securities (RMBS), representing just 1.92% of tier one banking capital. Three institutions had exposure to CDOs, representing a measly 0.17% of total assets.
Does this transfer to job market optimism? Yes: a recent survey by recruiters Joslin Rowe says that financial services staff in Ireland expect a 4.3% rise in bonuses, and the Irish recruiters we speak to remain buoyant.
Admittedly, Ireland’s banks haven’t emerged totally unscathed, with share prices falling sharply and Anglo Irish Bank being forced to cancel a bond offering due to unfavourable market conditions. However, Bank of Ireland’s €85m of SIVs and €50m CDO exposure are a mere drop in the €200bn ocean of its total assets.
Little surprise that Ireland’s financial services jobs market continues to boom. All that remains is to attract sufficient people to fill the vacancies.
