AGENDA

There are other worrying hurdles in the bank’s attempt to reach profitability. Administrative expenses have risen by a total of €72m in the past two years because of “legacy legal and compliance issues”. Untypically, Masding refuses to outline the background to these costs or any breakdown of them. The cost of compliance has risen for all banks, yet the burden is disproportionately high for small lenders.

The big issue is the ECB benchmark rate. Every 100 basis point rise in rates would be worth €130m in revenue to the bank, says Davy. A return to pre-crisis ECB interest rates would transform the bank’s fortunes, yet the market is not factoring a rise in ECB rates until the fourth quarter of 2017. Masding has trimmed deposit rates, but must do so without losing savers to make back last week’s hike.

The interest rate environment will be weighing even more heavily on the mind of Ross McEwan and senior managers at RBS. Its review of Ulster Bank is nearing a conclusion and its future rests on the prospect of making a return from the country’s third-largest banking franchise.

It, too, has a large tracker book. McEwan sees strong recovery in an economy where the bank has taken a huge amount of pain in restructuring charges. The crux is whether Ulster can actually make an acceptable return in such a low-interest-rate environment.

The best result for the Irish economy would be for RBS to remain as a committed and supported owner of Ulster Bank and to invest in the business. Draghi’s latest intervention nudges the bank in the opposite direction at just the wrong time.

Ill wind for NTR

Nobody gives a fiddler’s curse about corporate governance when times are good. When the brown stuff hits the fan, why, it becomes a core doctrine.

Tom Roche Sr used to chair NTR; Tom Roche Jr now chairs NTR.

When the toll road operator was churning out cash and dividends, nobody objected to the fact that a representative of the largest shareholder chaired the company. When Tom Jr sold off the West-Link toll bridge to the government and wind energy company Airtricity to SSE, and paid out chunky dividends to shareholders, nobody mentioned corporate governance.

Roche’s big problem is the hundreds of millions lost on misadventures such as bioethanol in Germany, waste in Britain and Ireland, and, most costly, its disastrous solar energy escapades in the Mojave desert in California. Shareholders, who queued up to criticise corporate governance at the annual meeting last week, have simply had enough. The pressure is now on NTR to sell its American wind assets — an investment success — and make a distribution to shareholders.

The two largest shareholders in the company, One51 and Pageant, are keen to bail out. They are refusing to support management plans to raise up to €150m to invest in European wind projects. It has even been hinted they may go legal to stop such a plan. An alternative would be to go full throttle and remove Roche at an extraordinary meeting, get approval to sell the US wind business and then seek to pay a special dividend.

One51 and Pageant control a combined 33%, against the 37% held by the Roches. Passing such resolutions would be no certainty. It would involve a battle for the smaller shareholders.

Here is where allegations of corporate governance failings could play against Roche. So, too, the €1.9m in incentive bonuses paid to executives. If small shareholders feel the Roches and the executives exert too much influence, then they could well vote them out of office — but only if the rebels are willing to go nuclear. Détente might be more advisable than a drawn-out cold war.

Banana skin for Fyffes

ISS, a shareholder proxy advisory firm, has done no favours to Fyffes in its pursuit of a merger with rival Chiquita Brands. ISS advised shareholders at Chiquita to stop the clock on the merger at a meeting last month, so its board can talk to Cutrale-Safra, a Brazilian-based consortium. Cutrale-Safra has offered $13 a share for Chiquita, an offer rejected by the American company.

It is affording a lot of latitude to the latecomers. The Fyffes-Chiquita merger was announced in March. Cutrale, an orange juice maker, and Safra, an investment bank, did not pop up on the horizon until August. Even after initial rejection, Cutrale had an opportunity to hike its offer, yet it did not do so.

ISS now says that the Brazilians should get access to the Chiquita books to explore a potentially higher bid.

The stock of proxy advisers is not exactly high at the moment. Their power rose as fund managers basically outsourced all of their decision-making to the “big two” of ISS and Glass Lewis.

In the tricky world of corporate governance, and where funds face thousands of shareholder votes, here was the perfect way to cover one’s backside.

Many believe the big two now have too much power, much akin to credit-rating agencies. One US lawyer said that ISS had become “a $4 trillion voter without owning any stock”.

Do they hold sway? Well, the feeling is that the more contested and important the vote, the more likely they will be ignored. Fyffes will be hoping so.

Paddy Power grab

It is surely a sign of the times when the top job at the biggest bookie in the country goes to a man credited with “driving the regulatory agenda” at the company. Andy McCue, a Scot, is, like predecessor Patrick Kennedy, a management consultant, big on strategy. Yet for many investors, it will have been a case of Andy McWho?

Faith, then, must be stored in the board of the company, which includes Stewart Kenny, a man who founded the business and knows it better than any other, and the other wily non-execs.

What odds now on Kennedy sidling over and stepping into a role once enjoyed by his father, David, as the chief executive of Aer Lingus?