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Opening Bell: IMF on dangerous banking, Dropbox in Dublin, SiteServ action

Christine Lagarde, IMF managing director has warned that there needs to be a culture-change in ba...
Newstalk
Newstalk

07.23 7 May 2015


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Opening Bell: IMF on dangerous...

Opening Bell: IMF on dangerous banking, Dropbox in Dublin, SiteServ action

Newstalk
Newstalk

07.23 7 May 2015


Share this article


Christine Lagarde, IMF managing director has warned that there needs to be a culture-change in banking, and that there is too much emphasis placed on chasing short-term gains.

She warned that bonus-heavy pay structures encourage excessive short-term risk-taking, and that this could be avoided by changing banking practises to reward long-term performance.

The IMF leader added that shareholders should have more of a say in pay structures, and that banks should have greater power to take back bonuses in the event of misconduct being discovered, or evidence emerging which shows that employees compromised the long-term performance of the bank by chasing short-term gains.

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While being primarily based in the US, Dropbox has told its 300 million users that most of them will be billed through the company's international operations centre in Dublin. 

This means that income accrued from some 70 percent of Dropbox users will be booked in Ireland where the company pays significantly less corporation tax.

A source close to the company has told the Irish Times that Ireland will not be used as a base to transfer income to another region with lower taxes.

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The European Central Bank has provided €2bn in emergency cash to Greece’s banks, the largest single tranche of such funds since the left wing Syriza government came to power in January.

The development, perhaps a signal that long-running negotiations about the measures Greece must take prior to new long-term funding, are making some progress. Greece has also met its latest €200m loan repayment to the IMF

Meanwhile, Bild, Germany’s largest-selling tabloid newspaper has claimed to reveal some of the measures Syriza is planning in order to satisfy its lenders. These include – a special tax for the country’s 500 richest families, raising tax rates for employees earning more than €30,000 and a new tax for overnight stays at luxury hotels on the islands popular with tourists.

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A cabinet minister has said a Commission of Investigation could be set up to investigate the sale of SiteServ.

But Brendan Howlin says a further inquiry would only be ordered if an internal inquiry uncovers some evidence of wrongdoing.

He was speaking as the Dáil voted down a Fianna Fáil proposal for a Commission of Investigation into the sale by IBRC to Denis O'Brien's Millington.

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Feedback provided by UK financial firms to the Irish Ambassador to Great Britain, Dan Mulhall has raised concerns about the regulatory environment in Ireland - it warns that this perception could be influencing businesses to choose to do business in other European countries.

These comments were contained in a briefing note prepared for Minister for Finance, Michael Noonan. It was released to Sinn Féin’s finance spokesman Pearse Doherty under Freedom of Information act, it says:

“Decision-makers at board level in the US are influenced by seeing their companies encountering far more regulatory problems in Ireland than, say, in Luxembourg.”


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