Paschal Donohoe wasn’t wrong when he said Ireland’s reputation had not suffered from this week’s Bank of Ireland fiasco. The more interesting question, though, is what reputation has Ireland to lose?
As any Irish Embassy official around Europe will tell the Minister, if asked, Ireland’s financial reputation will be linked for some time to come to its status as a perceived tax haven, in particular for tech companies such as Apple, and the banking collapse.
This week’s Bank of Ireland ATM “glitch” fitted into that perception. German news agency DPA wrote of “chaotic scenes” in a report picked up by dozens of outlets from daily newspapers and Stern magazine to stock market journals. Berlin’s Tagesspiegel daily quoted, in English, a Limerick Leader warning that “the town is in chaos” and that police had to be called in Dundalk.
Germany’s Deutsch Welle foreign news service told the world about Ireland’s “free money glitch” while Austria’s public broadcaster ORF spoke of “limits ignored”.
The most interesting coverage of Ireland this week, though, came from Switzerland, the capital of discreet banking.
While the Blick tabloid reported how “unusual activity” at ATMs attracted the attention of police, a Neue Zürcher Zeitung report on a “chastening Irish scenario” had nothing to do with this week’s run on ATMs.
Instead the newspaper was exploring how best to avoid an Anglo Irish Bank-style disaster and the bank guarantee. It had generated losses to date of €45 billion, the newspaper reported, and was “still in the heads of Swiss officials”.
They are grappling with the question of how best to regulate UBS. After swallowing failing rival Credit Suisse, UBS now has a balance sheet of 1,300 billion francs (€1.358 billion) or 10 times the size of the Swiss economy.
A Swiss expert commission is currently investigating how best to control such a banking colossus to minimise moral hazard and “too-big-to-fail” logic. Cork-born UBS chairman Colm Kelleher is ideally placed to assist the group on avoiding Anglo 2.0. Should questions arise, he may even explain the Bank of Ireland ATM chaos.
For now, Mr Donohoe should take heart from some German-language wisdom on such awkward situations: ist der Ruf erst ruiniert/lebt es sich ganz ungeniert, which translates as: once a reputation is ruined, life is free and easy.
