Inside the world of business
A step closer to full State control
TALK OF a second – or is it a third – bailout for the Irish banks is now well and truly out in the open.
It started with comments last week by Central Bank governor Patrick Honohan (below) to the effect that even if losses did not turn out to be any worse than expected, there was still an argument for overcapitalising the banks in order to inspire investor confidence.
This is the key to weaning the banks off their dependence on the European Central Bank (ECB), which has reached a level that nobody – the ECB in particular – is comfortable with.
Last night, the Taoiseach gave a strong indication that this evening’s meeting of the Euro Group will look at issue, hoping no doubt to find a solution that stops short of being characterised as a bailout for Ireland. Good luck with that.
The consequences for AIB of receiving even more funds are obvious and should see the Government’s stake rise to almost 100 per cent. This may well call into question the credibility of the Government plan to retain a market listing for the bank by voluntarily surrendering some of its voting rights.
The injection of further capital into Bank of Ireland may mean it will also pass into majority State ownership, but presumably will still be a credible listed company.
Irish Permanent will thus remain the only non State-controlled bank, but for how long? Its own survival plan involves a merger with the EBS cemented with an infusion of taxpayer cash. Presumably this entity will also need a larger capital buffer, meaning the Government’s stake will move from an expected 40 per cent to over 50 per cent.
And there you have it. The final fig leaf falls away and the Government owns the entire Irish banking system. With it goes one of the last shreds of Government’s credibility, but it’s unlikely to be noticed amidst the wider fallout from having to accept aid from the EU.
Calyx's tattered relationship with Anglo
MAURICE HEALY’S vision of turning Calyx into a pan-European provider of technology services began to crumble earlier this year as it became clear the group could no longer shoulder debts of more than €100 million.
Jon Moulton’s private equity vehicle Better Capital bought the debt from Anglo last September for just €10 million which enabled it to carve up the tech firm.
As with many other former Anglo clients, what seemed, from the outside at least, to have been a long and profitable relationship has now ended up in the Commercial Court. Anglo is seeking judgments of over €17 million against Calyx founder Healy.
The former Cork bookmaker formed Calyx in 2002 when he bought out the voice and data business of Alphyra in a €12 million deal backed by Anglo.
Calyx grew rapidly by acquiring rivals, initially in Ireland, with Anglo providing the finance. It was briefly listed on Aim, the London junior market, raising €10 million in the process. During that period it grew rapidly in Britain – again by buying potential rivals, most notably two divisions of the Matrix group, which it purchased for almost €60 million in 2006.
The following year Healy teamed up with British private equity firm Alchemy, where Moulton was the boss, to take Calyx private. The deal which valued the firm at more than €100 million left Healy with a 30 per cent stake while Alchemy held 59 per cent.
But just over a year later Alchemy and Healy apparently fell out over the future direction of the company. Healy bought out Alchemy for what is thought to be just €500,000 in cash, although he took on the loans that had been used to take Calyx private.
The tangled web linking Healy to Anglo also involved Calyx apparently being a major supplier of technology services to the now nationalised bank.
The once close relationship seems to be cutting little ice with Anglo’s new management. The tatters of the relationship will now be picked over by the court.
TODAY
The Euro Group of ministers meet today in Brussels, with Ireland’s economic situation certain to be top of the agenda.
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