Inside the world of business
New Danske chief to stick with NIB
A NEW chief executive took over at Danish bank Danske yesterday but the move is unlikely to lead to any changes in Ireland at National Irish Bank and Northern Bank.
Eivind Kolding replaced Peter Straarup, who ran Danske at the time of its ill-fated €1.4 billion purchase of the Irish banks in 2005 shortly before the property crash.
Kolding was chief executive of the container shipping company, Maersk Line, which is part of AP Moller-Maersk, the biggest shareholder in the Danish bank. Straarup was chief executive for 14 years but Kolding is not new to Danske. He was chairman for the last year and has sat on ITS board for about 10 years.
Ireland has been the biggest headache for Danske, as big losses on NIB’s €9 billion loans have shaved profits at the parent bank. NIB has provided for an astonishing 26 per cent of its loans to cover bad debts. This is below the level of provisions at AIB and Anglo Irish Bank but ahead of Bank of Ireland and Ulster Bank.
There is no doubt that if foreign banks could sell their Irish subsidiaries, they would. But in a market where €74 billion of loans are being run down by the National Asset Management Agency and a further €70 billion are being deleveraged by the Irish banks, buyers would only be interested in buying at deeply discounted prices.
Danske has committed itself to the Irish market and NIB chief Andrew Healy believes its strategy will not deviate under Kolding.
“I would be confident that it won’t change and Eivind has said that publicly,” Healy told The Irish Times last week on publication of loss-making NIB’s full-year results.
The bank is seeking new clients by targeting new businesses setting up in Ireland. This was the reason NIB hired Stephen Mullin, head of international corporate banking at Ulster Bank. NIB attracted 80 new corporate banking clients in 2011, said Healy. Unlike King Canute, Danish-owned NIB is best not to fight the tide of deleveraging and seek out new corporate business instead.
Fracking company deserves a fair hearing
REPRESENTATIVES OF Tamboran, the company hoping to drill for natural gas in the north-west, this week met politicians from the area in Leinster House.
It was not a formal committee hearing but an information session organised by Sligo-based Senator Susan O’Keeffe. Local politicians reacted with a degree of scepticism.
This is not surprising. Many voters in the area have come out against the plan as it involves using hydraulic fracturing, or fracking, to extract the gas. Some local authorities have passed motions stating their opposition to fracking.
Tamboran’s work to date indicates that Leitrim and Fermanagh hold a resevoir of about 4.4 trillion cubic feet of natural gas, more than four times what is contained in the Corrib field off the Atlantic coast.
The project is still at a very early stage, but a reservoir this size would create a lot of economic opportunities in an area that has had less than its share of them down through the years.
At this point anyway, Tamboran appears to have been open about its plans, how it is going to finance them and the fact that it favours strong regulation.
On that evidence, and given that we are at the beginning of what promises to be a slow process, it is worth giving the company a fair hearing.
Obviously there is a lot at stake for Tamboran and its backers, but there is also a lot at stake for areas such as Leitrim and Fermanagh, and for Ireland as a whole.
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