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.
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