In Ireland activity continues to increase in the commercial
lending, structured and aviation finance markets. The general
consensus is that Ireland is firmly in recovery mode. However,
recent comments by George Osborne, the UK Chancellor of the
Exchequer, warning of the potential impact of global risks to
the UK economy merit close attention. These risks include the
decline in commodity prices, developments in Asian economies
including China, and the potential impact on the world economy
of increases in interest rates. In addition, the outcome of a
referendum in the UK to decide whether the UK will remain part
of a reformed European Union is expected to have a significant
impact on the Irish economy.
The post-recession legal scene in Ireland features a number
of important changes. The Central Bank of Ireland (the CBI) has
strengthened regulatory powers. In particular, a statutory
administrative sanctions process has recently obtained the
blessing of the Irish High Court. The precise status of CBI
rules has been clarified by statute and court decisions. The
system for personal bankruptcy has been modernised to replace a
regime that was out-dated, long and cumbersome.
The most significant development over the last 12 months for
banking and finance lawyers is the move away from
loan-sales/purchases back to traditional transaction work.
Banks are engaging in new lending. There is a significant
increase in property development in Ireland –
especially in Dublin. This has traditionally been seen as a
bellwether of the overall economy. Banks and private equity
firms fund many of the large developments. The sale of loan
assets by banks, their liquidators and by Ireland's so-called
bad bank (the National Asset Management Agency) has seen an
increased level of activity by major private equity funds in
Ireland over the last few years. Many of these funds (which are
almost exclusively based in the UK and US) seem content to
continue to be invested in Ireland. Their role in providing
liquidity in the economy has been invaluable. Similarly,
structured finance activity continues to grow and aircraft
finance (and, in particular, aircraft leasing) continues to be
one of the on-going success stories of the Irish economy.
For banking and finance lawyers, times have changed
radically over the last 12 months. However, caution still needs
to be exercised. Domestically, there is always a risk of the
economy being over-reliant on the property market.
Internationally, the warning signs signalled by George Osborne
should not be ignored.