It was on 5th April, 2011 that there was a lot of hullabaloo when the publisher Business and Finance produced a story online (which has since been pulled) which suggested that entrepreneur and political activist, Declan Ganley was setting up a bank, and that prominent economists, Constantin Gurdgiev and David McWilliams were associated with the venture. It seems that the story had some truth to it in that a new venture, St Columbanus AG, had now formally announced its launch in May 2011 and its management committee (shown here) comprises Declan Ganley, Constantin Gurdgiev, Andrew Jamieson and Gregory Tutton – there doesn’t appear to be any mention whatsoever of David McWilliams. The venture describes itself as an asset management company and it will “offer a range of products and services to address concerns from the safety of fully insured savings deposits and long term inheritance planning.” It is not quite clear what the products will entail and my word processor is telling me there is no such word as “rebanking” but the venture’s website does say that it will deliver its offering “through our own products as well as with a limited number of selected Swiss partners who have the highest credit ratings and stable business models”
The Irish Independent reports that both Declan and Constantin are shareholders in the new venture and that Constantin will “take on a full-time job as director of research at St Columbanus in June. He’ll be based in Dublin”
With deposits apparently continuing to flee Irish banks and the country still being relatively wealthy and with lingering concerns over the solvency of the banking system as well as the State, it seems that this venture might be a bit of a no-brainer. It will be interesting to see how Constantin in particular deals with this new private commercial role as he is a widely respected economist and commentator on Ireland’s financial crisis. I wish them well.
NAMA Wine Lake 
I think Gurdgiev finally got sick of having people ignore–or worse deride–his advice. I suppose he figured he would be more useful managing the flighted funds than hopelessly trying the get the government to stem the tide.
Anyway, I think the joke is on Ganley and Co. I don’t imagine that Irish savers fleeing to Switzerland are going to be all that eager to hand their money to another Paddy when they finally get it there. I could be wrong, but after all that’s happened, I wouldn’t trust a fellow countryman to look after my pet rock, let alone my life savings.
Lorenzo – “Consider, as an illustration, the recent experience of the Swiss franc, a currency which is renowned for its stability. After the onset of the global financial and economic crisis the franc appreciated by 17% vis-à-vis the euro in 2010 alone, driven by the reallocation of global capital on a massive scale. This has fuelled deflationary risks and slowed economic growth. To counter these effects, massive unilateral interventions were conducted, leading de facto to a closer alignment of monetary conditions with those in the euro area. ”
For the last decade or more the Franc is not a special currency – in the event of a further increase of its value relative to other currencies due to the rolling nature of economic shocks its loans will be difficult to service and its watches will be difficult to export.
There is only one fundamental mechanism to relieve the stress on free floating currency exchange flows and thats the stuff that the SNB sold by the shitload on Euro convergence.
The Franc is not what it was……..
It devalued during the last depression and will devalue again me thinks……….just saying
PS if we don’t buy our own debt someone else will but at a higher interest rate that will externalise the Irish money supply at a accelerating rate – further contracting demand in our country as the rest of the euro/Sterling / franc area benefits from our surplus.
We are exporting our money now as well as our people and goods – but money always comes first then the people and goods always follow.
I am holding on to Gold and Irish debt – as if /when the euro extraction mechanism reaches its zenith they will revalue Gold upwards rather then eject such a compliant Euro member – we are just too profitable/ stupid to be let go.
@TDOC, although Lorenzo Bini Smaghi’s words are true, I don’t think that Columbanus has announced any details of the specific products it will be offering. Just as you can hold sterling accounts with Irish banks in Ireland, you can hold euros in Switzerland so there needn’t necessarily be any exchange cost or currency risk.
@Namawinelake
Fair enough , people are probably moving out of Irish accounts chiefly because of a belief in default risk rather then speculation in currencies per se.
But what happens when all money is moved to Switzerland and we have no money to trade ?
Such a extreme disequilibrium now seems unlikely to me – the Swiss or Swiss based Irishmen !! need us to engage in economic activity if they want to get interest income off us in the long term although their more tradional storage fee banking culture may survive this bizarre monetory world.
This is why I am such a Gold bull at least in the long run – this extreme dislocation of monetory flows can only make money in the short run for the gnomes and leprechauns – for trade, commerce and wealth creation each economic juristiction needs a large amount of money stock to facilitate the medium of exchange – its value will have to decrease substantially against the useless metal.
However the Euro masters will not want to give up such a prize as Ireland – what other population moves to such extremes to follow the movements of credit flows , I would suggest nobody in Europe as least.
We are a bankers wet dream – they would be foolish to kick us out of bed.
There is still a great deal of inertia among cautious Irish depositors who are reluctant to go to the trouble of taking or even seeking advice. Much retail advice is utter rubbish given by individuals who have neither the experience nor understanding, beyond a superficial level to have any worthwhile original opinions of their own. Many depositors realise this, but don’t know who to get decent advice from.
In this respect the venture is filling a gap in the market. Constantin will be a comparatively trusted face, particularly for the economically curious open to the idea of cynical actions by the Irish government – through his regular appearances on Vincent Browne. The VB demographic should be a nice fit also.
What might be interesting is the position of overseas investment houses and banks who have on the whole been very subtle with regard to marketing in Ireland so far. Perhaps they might not stick to that policy.
The timing, given the pensions “levy” is interesting. It is also interesting to me that there is probably more willingness currently among ordinary punters to consider such action than before the “overcapitalisation” of the Irish banks. It does suggest that Patrick Honohan’s big window of opportunity really was the same one that might have allowed him to prevent the replacement of the ELG and force the government into bank resolution. The credibility horse would appear to have left the stable.
Sometimes people can be really funny…. I too consider Constantin as an outstanding commentator who has spend uncountable hours to lift the fog on questionable propaganda that made up the banking and financial stories in Ireland in the past years.
In my humble opinion, he has done Ireland a great service.
So I posted a short link to the St. Columbanus site with directors, and wished him all the best, when another poster replied straight away to point out that:
…. none of them are born in Ireland.
Sigh…No further comment needed I guess.
[…] […]
solicitors letter
http://www.broadsheet.ie/2011/05/12/declan-ganley-his-lawyers-and-his-bank/