Posts tagged ‘Loan’
NAMA report and accounts for Q3, 2010 – is there a political reason for the delay in their publication?
Money and Banking Statistics: December 2010
Well one thing is for sure, the period between NAMA delivering its quarterly report and accounts to the Department of Finance and the DoF publishing said documents is growing larger with the passage of each quarter as illustrated below:
QuarterCovering period toDelivered to DoFPublished
131st March, 201030th June, 201013th July, 2010
230th June, 201030th Sept, 20102nd November, 2010
330th Sept, 201031st Dec, 2010Still waiting………
There was a detailed entry on here at the start of January, 2011 examining the likely features of the Q3, 2010 report and accounts. From an incumbent party political viewpoint, the sensitive issue with these accounts will be the fact that NAMA has lost some €2bn+ since its incorporation. How? NAMA purchased loans by reference to a valuation date of 30th November, 2009 and although some markets have improved since then, the home market where the assets underpinning two thirds of NAMA’s loans are located has tanked. Also NAMA paid a Long Term Economic Value of an average of 10% above the value of the asset. Now it is true that 5% of NAMA consideration for loans is in the form of subordinated debt which will only be honoured if NAMA breaks even and it is also true that the NAMA Act provides for a levy on the banks proportionate to the value of loans absorbed (so Anglo and INBS will need cough up more than 50% of any ultimate loss which is of course ridiculous but practically speaking it is also ridiculous for AIB and EBS which are effectively State-owned, Bank of Ireland faces a challenging future). Taking all of this into account
So it may be the case that the Department of Finance (prop: Brian Lenihan, minister) may try to delay the publication of the accounts which remember are already four months out of date as they relate to the quarter ending 30th September, 2010. And remember also, the role of the DoF is not to change the accounts so arguably they should be generally published simultaneously with their delivery to the DoF. And even if the accounts are published, they are unlikely to show a loss because NAMA is unlikely to revalue tens of billions of euros of loans each quarter. But I think it will be perfectly reasonable to ask NAMA for a ballpark of the loss in value of the loans compared with their acquisition value (the answer should be €2bn +).
Ireland’s Bailout Scandal EFSF Funds to Cost Irish Taxpayer 9% Per Annum
Call for the Resignation of the Governor of the Central Bank
European Wire service: 26th. January 2011:
“Frankfurt – European Financial Stability Facility (EFSF) today placed its inaugural bond for an amount of €5 billion as part of the EU/IMF financial support package agreed for Ireland. The issuance spread was fixed at mid-swap plus 6 basis points. This implies borrowing costs for EFSF of 2.89%. Investor interest was exceptionally strong, a record breaking order book of €44.5 billion from more than 500 investors. Investor demand came from around the world and from all types of institutions. Very strong demand came from Asia. The Government of Japan purchased over 20% of the issue, reflecting its early commitment with the intention of contributing to European financial stability.
Klaus Regling, EFSF’s CEO commented “I am delighted with the outcome of our inaugural issue. The huge investor interest confirms confidence in the strategy adopted to restore financial stability in the euro area”. Citi, HSBC and Société Générale acted as lead managers for this first EFSF issue and Deutsche Finanzagentur, the German Debt Management Office, acted as Issuance Agent. Klaus Regling expressed his gratitude to all participants for the successful placement of EFSF’s first issue.
The funds will be disbursed to Ireland on 1 February (5 business days settlement). This will match Ireland’s request for a loan of €3.3 billion. The difference between the amount raised on the markets and the amount disbursed to Ireland is due to EFSF’s credit enhancements using a cash reserve and loan-specific cash buffer to secure a triple A rating. The cash reserve comprises a margin rate and a one-off service fee. It is also explained by EFSF’s structure which requires both the principal and interest to be covered by guarantees. The final cost charged to Ireland and the exact loan amount will only be known once the cash reserve and the loan specific cash buffer, which are retained by EFSF, have been reinvested.”
The scandal surrounding Ireland’s IMF/EU bailout continues to gather momentum following the collapse of Brian Cowen’s position as Taoiseach (Prime Minister) of Ireland.
There are now growing calls for the resignation of Mr. Paddy Honohan, the embattled Governor of the Irish Central bank, due to the fact that he was the lead negotiator during the disastrous bailout talks.
It turns out that even though the EFSF is borrowing funds at 2.89%, Ireland is in effect being charge nearly 9%. This is a higher rate charged on come credit cards in mainland Luxemburg where the private EFSF is based (it is a structured investment vehicle a la Enron fame).
Ostensibly Ireland is paying approximately 6% but in fact the Emerald Isle will receive only 66% of funds raised, though taxpayers must fully guarantee 100% of the principal and interest. Thus when you add fees and funds withheld the real rate, according to my math, is 9% approx.
Clearly something went wrong and it looks like heads are set to roll.
It is expected that Brian Cowen will dissolve the Irish Parliament before next Wednesday February 2nd. The election campaign that will follow is set to be one of the most contentious in living memory with implications for the future of the Irish parliamentary system and the stability of the wider Euro project.
Watch this space folks it’s going to be a wild ride.
something stinks ,this is sheer robbery!
Why is this not on the national air waves instead of waffling on about Martin talking to Edna or Eamon! Who gives a damn “where are these billions going”? Who is responsible?
Who agreed to this scam? So we the taxpayers are been fleeced all over again!
What are the politicians talking about while this scandal is unfolding under their noses?
The people who have been involved in the setting up of this so called bailout are in fact earning a fortune on our misery and our officials, we expected to look after our interests are just as incompetent as the politicians who caused this travesty in the first place it would seem!
The fraud squad should be immieadetely be brought in and prosecutions should follow .The Central Bank Governor should be brought in for questioning and until the outcome of this enquire, he should be relieved of this post.
we are supposed to be getting 5 billion but end up with 3.5 billion and the rest goes to persons unknown as fees this is the last straw we must not let this go unanswered the guilty are having a laugh ?
- EFSF Places First Bond Issue For E5 Bln; Borrowing Cost 2.89% (forexlive.com)
- WRAPUP 2-Strong demand for EFSF bond boosts euro confidence (reuters.com)
- Eurostat: EFSF Funds Raised Must Be Counted As Debt By Govts (forexlive.com)
- Debut issue by EFSF bailout fund heavily in demand (reuters.com)
The following is taken from Debt and Development Coalition Ireland’s publication ‘A Global Justice Perspective on the Irish EU-IMF Loans: Lessons From the Wider World‘ (PDF).
This document outlines lessons from the global debt justice movement in responding to debt crises, provides a background to the Irish EU-IMF loans (up to the 28th November 2010 – before the loan documents were made public), and offers some recommendations from DDCI based on these lessons from our work. It also flags up recommendations from other groups.
Key Lessons highlighted include:
1. The legitimacy of the IMF as a lending institution is deeply questionable – due to its undemocratic governance structure, the devastating impacts of its policy conditions on the world’s poorest people, and its lack of transparency. Unfortunately the IMF has not adequately reformed its policy conditionality practices since the recent global financial crisis. Since becoming a member of the IMF in 1957, Ireland has failed to influence the IMF to reform in these areas.
2. The practice of lender policy conditionality hides who are the driving forces behind policy actions taken by borrowing governments.
3. The precedent of the EU-IMF lender combination has shown the EU to have adopted a tough position toward EU countries in crisis. New proposals on lending practices within the EU are already forthcoming from government and civil society sources and need to be monitored in terms of their implications for international lending practices and any impact on Southern nations.
4. It has been possible for Southern borrowing countries in debt crises to stand up to lenders and survive. Justice campaigners in Southern countries and some governments, have also demonstrated that there are alternatives to lenders’ policy conditions and the importance of fighting for them
Recommendations from DDCI:
Lesson 1:The IMF and Ireland’s Membership
Recommendation: Fundamental reform of the IMF’s role is long overdue. DDCI has been calling for a set of key reforms in Irish government policy toward the IMF central to which are:
- An end to the IMF’s practice of attaching economic policy conditions to its loans
- Fundamental reform to the IMF’s governance structure to include far greater voice and vote for Southern countries (for example through introducing a double majority voting system)
Lesson 2: Policy Conditionality and the EU-IMF Lending Dynamic
Recommendation: If the EU-IMF loans are accepted by Ireland (DDCI is not proposing that the loans should be accepted by Ireland) there must be total transparency so that the roles the EU and IMF are playing as combined lenders are clear:
- All loan documents must be made public and put before the Dáil for decision. In the case of the potential drawing up of loan documents before the 2010 budget, they must be scrutinised, debated and voted on in the Dáil before the budget is published.
- The Irish government must make public to the Dáil and the Irish people, the areas of agreement and divergence between the Irish government, the EU and IMF through the full period of negotiation on any loan agreements;
- All records of dialogue with the EU-IMF lenders should be publicly available now and through all reporting stages on any loans.
- In any subsequent annual budgets, any lending or review documents should be put to the Dáil for decision after the national budget is agreed so that lending agreements or recommendations from lenders do not take precedent.
Lesson 3: Potential new EU/International approaches to lending and borrowing?
Recommendation: Any proposed new lending or debt management principles that may emerge among EU member states in response to the eurozone crisis must support Southern nations’ right to debt justice.
Recommendations from other groups:
Lesson 4: Fighting for Alternatives
Trade unions and economists are proposing a number of possible options regarding lender responsibilities. Some of the documented ones so far include (in no particular order): ICTU (supporting a write down on all bank bondholders holdings to 10% of their nominal value); Michael Taft / Unite (supporting write downs on bank bondholder debt); Dr Andy Storey (supporting debt default / repudiation); economist David McWilliams (calling for Debt to Equity Swaps). A range of budgetary options which prioritise protecting the majority of people from unjust and damaging budgetary measures and outlining alternative budgets can be found from lots of active social justice civil society groups including: http://www.socialjusticeireland.org; http://www.communityplatform.org; http://www.unitetheunion.org, http://www.ictu.ie, http://www.olderandbolder.ie, among plenty of other groups.
It is still not too late to get the bondholders to take Debt to Equity Swaps as belive we in this country of ours do not have the earnings capacity to meet the penal interest rates and the market agrees with me .
The Current spin thet we have to pass this budget is a spin the bondholders are suporting as they are the ones that will get burned if we do not do their bidding we must not allow this budget to get passes it will give all future goverements the excuse to interduce all sorts of tax raising measures as well as the excuses to slash public services and sell off all the countries assets this is why the oppisittion are behiend the seans suporting the commming budget
The gathering mortgage crisis puts Ireland on the cusp of a social conflict on the scale of the Land War, but with one crucial difference. Whereas the Land War faced tenant farmers against a relative handful of mostly foreign landlords, the looming Mortgage War will pit recent house buyers against the majority of families who feel they worked hard and made sacrifices to pay off their mortgages, or else decided not to buy during the bubble, and who think those with mortgages should be made to pay them off. Any relief to struggling mortgage-holders will come not out of bank profits – there is no longer any such thing – but from the pockets of other taxpayers.
The other crumbling dam against mass mortgage default is house prices. House prices are driven by the size of mortgages that banks give out. That is why, even though Irish banks face long-run funding costs of at least 8 per cent (if they could find anyone to lend to them), they are still giving out mortgages at 5 per cent, to maintain an artificial floor on house prices. Without this trickle of new mortgages, prices would collapse and mass defaults ensue.
However, once Irish banks pass under direct ECB control next year, they will be forced to stop lending in order to shrink their balance sheets back to a level that can be funded from customer deposits. With no new mortgage lending, the housing market will be driven by cash transactions, and prices will collapse accordingly.
I agree ,we are in a holding position currently but it is unsustainable as the banks are having to borrower at 7.34% and are lending at 5% hence to collapse in mortgage lending so as I have said many times before I wouldn’t be a buyer at the current market prices I see at least a 35-40% drop heading our way in the next year as I believe the prices are also been determent by the national average wage as most of the first time buyer are from this category and the banks are now been dictated to be Brussels and I know that Brussels insists a loan ratio of no more than 2.5% salary . So let’s suppose an average industrial wage of 25,000:00 Euro then we will have an average house price of 75,000:00 Euro which is about the average European home price