Syndicated News Archives - Kelly Rahill Accountants

EU agrees steps towards tighter money-laundering supervision

European Union finance ministers today backed plans for greater powers to combat money laundering after a series of revelations about large amounts of dirty money flowing through European banks.

The EU last year experienced its largest money-laundering scandal when it emerged that €200 billion in suspicious payments were made between 2007 and 2015 through Danske Bank’s tiny Estonian branch. 

Several other cases have emerged since then, the latest involving Malta’s largest lender, Bank of Valletta, which the European Central Bank said had for years failed to address dirty-money risks. 

Ministers called on the European Commission to explore the possibility of transferring supervisory powers to an EU body and to amend rules to strengthen coordination among national authorities.

Despite criminal organisations frequently laundering the proceeds of their illegal activities abroad, the fight against financial crime in the EU is currently mostly handled by national authorities, which do not always cooperate fully.

Ministers said an EU body “with an independent structure and direct powers” over banks should be considered, reversing opposition to such a move last year.

They also urged a fresh overhaul of EU rules to fight dirty money, only a year after the bloc adopted the fifth revision of its anti money-laundering rules. 

Last year’s reform was watered down by conflicting interestsamong EU states, and quickly appeared insufficient as new scandals emerged. 

Before the meeting, some of the EU’s largest states, including Germany, France and Italy, said powers should be transferred to an EU authority because national watchdogs had proved incapable of tackling financial crime.

They went as far as saying there was a risk of some national supervisors “being influenced directly or indirectly bysupervised institutions or interest groups”. 

Smaller states, such as Luxembourg, Malta, Cyprus and the Baltic countries, have been accused of lax controls which have allowed repeated cases of money laundering. 

Most ministers supported the joint statement at a public session of their meeting today, but some, such as Luxembourg, did not join the discussion, leaving it unclear whether they would back the reform. 

Malta’s finance minister, Edward Scicluna, said he fully backed the overhaul. 

He faces a criminal probe over money laundering in which he denies wrongdoing. 

The Maltese government has also confirmed support for state-owned Bank of Valletta after its dirty-money shortfalls emerged last month.

Article Source: Click Here

Minister to discuss US tariffs on Irish goods

The Minister of State for European Affairs, Helen McEntee, will discuss the imposition of US tariffs on Irish goods at a series of meetings in Washington this week. 

She is due to holds talks on Capitol Hill and with the American Chamber of Commerce. 

In October it was announced that a range of goods from the EU were to be subjected to US duties including Irish butter, cheese, liqueurs and pork products. 

Irish whiskey made in Northern Ireland was on the list of goods but whiskey made in the Republic of Ireland was spared. 

Now however there are growing concerns that Irish whiskey could be affected. 

The tariffs were announced in retaliation for EU aircraft subsidies and earlier this week the World Trade Organisation said Europe had not complied with obligations to remove subsidies to Airbus. 

In response, the office of the US Trade Representative said it is considering increasing the tariff rates and subjecting additional EU products to the tariffs. 

Speaking in Washington, Helen McEntee described tariffs as short-sighted and counterproductive and that she will be raising the issue in her meetings this week. 

She also urged the EU and the US to sit down for talks. 

“From an Irish point of view, we’ve always tried to advocate engagement and to bring people around the table to resolve this,” she said. 

Article Source: Click Here

Euro zone growth curbed by trade, retail sales slowdown

The euro zone economy grew at a modest pace in the third quarter with a negative impact from trade, while retail sales fell at their sharpest rate this year in October, data showed today. 

Gross domestic product (GDP) in the euro zone was up 0.2% in the three months from July to September.

This was the same figure as the flash estimate released in October and unchanged from the second quarter. 

Retail sales in the euro zone in October fell by 0.6%, double the amount expected in a Reuters poll, and were up a modest 1.4% year-on-year. The monthly decline was the steepest fall of 2019. 

The data confirmed a sombre outlook for the single currency bloc, which is facing threats and uncertainty over Brexit and rising global trade conflicts. 

Britain had been set to exit the European Union at the end of October, a deadline since pushed back until the end of January. 

In trade, the US outlined the first phase of a deal to end its conflict war with China in October, but the two are still arguing about the details. 

Year-on-year, euro zone expansion was 1.2%, also the same figure as in the second quarter of the year. 

The bloc’s largest and third largest economies, Germany and Italy, grew by just 0.1% during the quarter, while in France, the second largest economy, growth was 0.3%. 

Household spending was the strongest overall contributor, boosting euro zone growth by 0.3% percentage points, followed by government spending and capital investment at 0.1 points.

However, the contributions of trade and of inventory changes were negative, in the case of trade for a second consecutive quarter. 

In the October retail sales figures, non-food sales declined, particularly online and mail order sales, although these tend to pick up in November and December ahead of the Christmas period. 

Eurostat also said that the growth of employment in the euro zone slowed in the third quarter to 0.1% from 0.2% in the second quarter. 

Year-on-year the figure was also softer at 0.9% from 1.2% previously.

Article Source: Click Here

88% of Irish SME food companies expect revenue growth in 2020

A new survey shows that 88% of Irish food companies expect revenue growth in the year ahead, with 34% of these companies expecting revenue growth of over 10%. 

The SME Irish Food Barometer was carried out by PwC and Love Irish Food.

It also reveals that while companies are optimistic about the growth prospects for their own businesses, they are less certain about the future performance of the economy. 

Almost all respondents – 96% – confirmed that they are planning some form of capital investment next year in order to develop their business, with 10% saying this investment would be in excess of €3m.

But just 16% of SME food firms believe that economic growth in Ireland will improve in the year ahead, 50% say it will remain unchanged and 34% say it will decline. 

As a small open economy, this is not surprising given external uncertainties, PwC said.

Today’s barometer also shows that just 6% of Irish food companies expect to achieve price increases in current trading conditions. 

PwC said this suggests that margin improvements will be derived from advances in technology and operational efficiencies.

The barometer shows that key challenges curtailing growth prospects include availability of labour (43%), trade wars and tariffs (37%), operational costs such as energy, insurance and rates (28%), volatile commodity prices (21%) and embracing the sustainability agenda (17%).

84% of companies confirmed that they have an environmental sustainability plan in place to make improvements in 2020.  Key areas for this investment are energy consumption, reducing plastics and water usage. 

On Brexit, just 31% of companies surveyed said they had delayed investment in the organisation due to the UK’s planned departure from the European Union. 

Any delayed investment was mainly in areas such as production capacity, operational resources innovation and marketing. 

Grace McCullen, Senior Manager at PwC Ireland Retail & Consumer Practice, said the survey highlights optimism about the future growth potential for Irish food companies. 

“They are also keen to seek operational efficiencies through innovation and technologies to improve margins, cost competitiveness and satisfied consumers,” Ms McCullen said. 

“With the domestic market being the priority for growth prospects, expanding  into new markets and new products should not be ignored. The UK will exit the EU at some point and that will give rise to new opportunities for manufacturing food products in Ireland that may have been supplied from the UK,” she added.

Article Source: Click Here

Euro zone business growth near-stagnant, but some hopeful signs evident – PMI

Euro zone business activity stayed near stall speed last month, with manufacturing seemingly continuing to act as a drag on the bloc’s dominant services industry as well as the economy as a whole. 

Despite some optimistic signs in today’s survey, that picture is likely to disappoint policymakers at the European Central Bank.

In September, the ECB relaunched a €2.6 trillion asset purchase programme designed to stimulate growth and inflation. 

IHS Markit’s final euro zone composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, held steady last month at October’s 50.6. 

That beat a preliminary estimate of 50.3 but remains uncomfortably close to the 50 mark separating growth from contraction. 

The headline figure “still indicates a near-stagnant economy,” said Chris Williamson, chief business economist at IHS Markit. 

The data pointed to fourth quarter GDP growth of 0.1%, with manufacturing continuing to act as a major drag. 

“Worryingly, the service sector is also on course for its weakest quarterly expansion for five years, hinting strongly that the slowdown continues to spread,” he said. 

A Reuters poll last month had predicted growth of 0.2% this quarter. 

Offering glimmers of hope, an index measuring demand climbed to the breakeven mark having spent two months below it, firms increased the pace of hiring and optimism was at a four-month high.

The new business index was 50 compared to October’s 49.6.

“New orders have not shown any growth since August, underscoring the recent weakness of demand, with sharply declining orders for manufactured goods accompanied by substantially weaker gains of new business into the service sector,” Chris Williamson said. 

Overall services industry activity stuttered. Its PMI dipped to 51.9 from 52.2, although edging above a 51.5 flash reading. 

Still, reflecting some level of increased optimism, firms increased headcount at a faster rate. The employment index nudged up to 53.2 from 53. 

Article Source: Click Here

Services sector growth sees strong bounce in November

The country’s service sector growth bounced back strongly last month from a seven-year low as business confidence rose to its highest level since June amid firmer demand from customers, a survey showed today. 

A slowdown in manufacturing activity had threatened to spread in October to the services sector, where a long expansion in new orders weakened to a near standstill. 

But new orders rebounded to a three-month high in November.

This sent the AIB IHS Markit Purchasing Managers’ Index (PMI) for services to 53.7 from 50.6, its lowest since July 2012 and close to the 50 mark that separates growth from contraction. 

The services sector covers areas as diverse as communication, financial and business services, IT and the tourism trade. 

AIB said that panelists reported an increase in orders from existing and new customers in Britain, the US and Latin America. 

As a result, the sub-index measuring business expectations rose to a five-month high of 66.4 from 63.3 in October. 

While factory activity shrank again last month after a brief reprieve in October, a survey released yesterday showed that consumer sentiment recovered sharply from a seven-year low over the same period as the risk of a damaging no-deal Brexit receded. 

“The strong rebound in November is a welcome relief. It suggests the fall (in October) was an aberration and that the Irish services sector is continuing to perform strongly,” AIB’s chief economist Oliver Mangan said. 

“The details make for encouraging reading. Activity expanded in all four of the broad service sectors covered in the survey,” he added.

Article Source: Click Here

Central Bank to assess commercial property-focused funds

The Central Bank will conduct a “deep dive” into the role of property funds in the domestic commercial real estate sector and assess whether a macroprudential response is needed to any potential risks, Governor Gabriel Makhlouf said today.

Research from the Central Bank showed that Irish investment funds now account for more than 35% of the rapidly growing commercial real estate market, having invested a total of €18 billion in property and land here

“My prime motivation is to understand much, much more and shine a light on exactly what’s going on because one thing I want to absolutely avoid is getting on the back foot if something happens and it has an impact on the financial system as a whole,” Mr Makhlouf told a news conference today.

The Central Bank also announced that it would not force lenders here to hold more capital under two buffers it levies on them – the countercyclical capital buffer (CCyB) and Other Systemically Important Institutions (O-SIIs).

Under the O-SIIs, banks identified as systemically important to the domestic economy because of their size and market share must hold additional capital. 

Barclays and Bank of America were designated as O-SIIs for the first time today after they moved significant operations to Ireland as a result of Brexit. 

The bank’s Irish subsidiaries will have to set aside 0.75% of risk-weighted assets. 

Meanwhile, UniCredit and Depfa Bank’s Irish units are no longer designated as O-SIIs, the Central Bank said.

Central Bank Governor Gabriel Makhlouf, one of the newest members of the European Central Bank’s Governing Council, also said today that negative interest rates were an effective measure.

But he added that that they would be more effective if governments backed them up with fiscal measures. 

“Are negative rates working? I think they are working, which is why the governning council took the decisions it did back in September,” Mr Makhlouf told today’s news conference in Dublin.

“The point that Mr Draghi made at the time is that monetary policy would work much more effectively if it was supported by other tools, in particularly fiscal tools,” he added.

Article Source: Click Here

No change to Central Bank’s mortgage lending rules

The Central Bank has decided not to make any changes to mortgage lending rules here that limit how much people can borrow from banks in order to fund house purchases. 

Following a review, the regulator has concluded that the measures continue to meet their objectives of strengthening bank and borrower resilience.

It also said the measures reduce the likelihood and impact of a credit-house price spiral emerging. 

Without the restrictions, the Central Bank estimates that house prices this year would been 15% to 25% higher than they currently are. 

The measures were introduced in 2015 in order to strengthen the resilience of borrowers and lenders and to reduce the likelihood of an unsustainable credit fuelled housing boom. 

The Central Bank claims the rules are not meant to target house prices. 

The rules include a borrowing limit of three and half times gross income, while borrowers must have a particular level of deposit set aside dependent on whether they are buying a house for the first or second time or as an investment. 

The decision not to change the restrictions is likely to come as a disappointment to some would-be-borrowers who had been hoping for some relaxation in order to enable them to borrow funds they require to make a purchase. 

Some in the banking industry and in politics are also likely to be unhappy.

Earlier this year, AIB chief executive Colin Hunt said the rules should not be set in stone. 

Taoiseach Leo Varadkar also expressed hope that there would be some changes in order to help those renting, while also recognising the independence of the Central Bank. 

In its 2019 review, the Central Bank said the measures have been effective in strengthening borrower and lender resilience and in limiting the potential for an adverse credit-house price spiral to emerge. 

Without them, both house price levels and the proportion of highly indebted mortgage borrowers would likely have been significantly higher this year, it said. 

It added that while the aim of the measures is not to target house prices, analysis suggests that without them, affordability pressures for mortgage borrowers would have been even more acute.

It maintains that supply restrictions, not the lending rules, are what is continuing to fuel House price growth.

In its latest Financial Stability Review, the Central Bank also says that the main risks facing the economy here continue to stem from external developments, such as falling global interest rates and Brexit,.

It also pointed to a gradual domestic build up of cyclical risks in the economy as it comes close to capacity. 

The Central Bank said the banking system is now better able to absorb shocks, but cautioned that further progress is needed in key areas such as non-performing loan reduction. 

The review concludes that the continuing risk of a disorderly Brexit and the macroeconomic shock that could follow would be sizeable, with more severe effects in certain regions and sectors. 

It also identifies the growth in leveraged lending markets internationally, through the growth in the use of instruments such as collateralised loan obligations. 

Changes in the international trading and tax environment could also impact Ireland as a small open economy that is highly integrated into global supply chains, it cautioned. 

The possible re-emergence of sovereign debt concerns in the euro area is also a worry, the bank claims, with sovereign debt levels in some parts of the euro zone remaining high. 

If a disorderly Brexit does not arise, then the prospects for the Irish economy remain favourable, it said, but the economy is also near capacity and credit growth is strengthening.

On sovereign debt, the Central Bank found ratios of debt to the GNI* measurement of the size of the economy have improved in recent years on back of strong growth, but a range of possible shocks have the potential to impact that.

The bank also points to possible risks in the non-bank financial sector.

Article Source: Click Here

First-time buyers drive demand for mortgage approvals

New figures from Banking & Payments Federation Ireland show strong growth in mortgage approvals figures for October, driven by demand from first-time buyers.

The BPFI figures show that a total of 4,514 mortgages were approved in October . Of these 51.6% were for first-time buyers while mover purchasers accounted for 27%.

BPFI also said that the number of mortgages approved in October rose by 18% month-on-month and by 5.9% year-on-year.

Mortgages approved in October were valued at €1.020 billion. First time buyers accounted for €547m of this, while  €308m were accounted for by mover purchasers.

The value of mortgage approvals rose by 22.5% on a monthly basis and by 9.7% on an annual basis. 

Meanwhile, re-mortgage and or switching approvals rose by 17.1% in volume on the previous month and fell by 1.5% year on year.

Article Source: Click Here

Contactless payments grow steadily; BPFI

Consumers made almost 1.5 million contactless payments a day between July and end-September, according to figures from the Banking & Payments Federation.

Contactless payments are those where consumers ‘tap’ their cards or devices and make payment without inputting a code on the payment device.

The number of such payments grew by 44% year on year in the three month period with almost 135 million payments made to a value of more than €1.6 billion.

Just over four in ten credit and debit card payments were contactless in the period accounting for 11% of the total value of card transactions.

Contactless payments are relatively low value, averaging €12.03 per payment.

That compares with €40.73 for all debit card payments and €75.86 for credit card payments.

There is a €30 limit on a contactless payment, above which level consumers are required to input a pin in order to execute a transaction.

“Consumers want fast, simple and secure payments. That’s why they have adopted contactless payment so quickly,” Brian Hayes, Chief executive of the BPFI said.

“With contactless-enabled cards already in most wallets, future growth will come mainly from increased usage of contactless payments and the latest figures show that consumers are using contactless payments more and more.”

Article Source: Click Here