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Posts tagged ‘namawinelake’

Namawinelake closure

by

I do not know the reasons behind the Namawinelake decision to stop operations, but the announcement that the blog will cease publishing new material starting from tomorrow was a shocker for me.
I can attest from my own & others’ experiences that those of us who run anything independent of the officialdom mouthpieces (regardless of political / ideological orientation or even the lack of one) have near-zero support (moral or citations- and links-wise) from our internal (not to be confused with international) media and all businesses.
Those in our society, including the traditional media, who only benefit from the free analysis and the climate of openness and debate the independent analysts help to create prefer to endlessly endorse and support, including via advertising revenues, cross-links, citations and readership, those who offer no alternative but…….

full article at source:http://trueeconomics.blogspot.ie/

NAMA does secret deal with DDDA

We haven’t heard a great deal of late about the fate of the 25-acre Irish Glass Bottle site in Ringsend, Dublin which is curious, as it is one of the most expensive assets under NAMA’s control by reference to its value in 2006 when it was bought for €412m by a consortium which essentially comprised Bernard McNamara, Derek Quinlan and the state-owned Dublin Docklands Development Authority (DDDA). It is estimated that the site today is worth €50m; there are three feature blogposts on the history and current status of the site on here – here and here and here.

full article at source:http://namawinelake.wordpress.com/2011/11/26/nama-does-secret-deal-with-ddda-to-erase-liability-for-idiotic-property-development-decisions/

CSO residential property price indices for Sept 2011

By Namawinelake

This morning has seen the publication of the seventh CSO residential property price indices for Ireland. The inaugural series was published by the CSO on 13th May 2011 and covered the period from January 2005 to March 2011. This morning’s release covers the month of September 2011. Here’s the summary showing the index at its peak, November 2009 (the NAMA valuation date), September 2010 (12 months ago), December 2010 (end of year, start of this year) and September 2011
full article at source:http://namawinelake.wordpress.com/2011/10/25/cso-residential-property-indices-for-september-2011-published-%e2%80%93-declines-continue-across-board-with-a-4-8-monthly-decline-in-dublin-apartments/

Derek Quinlan’s art collection to be sold by NAMA

By Namawinelake

In terms of transparency in engaging suppliers of services, NAMA seems to be burrowing itself deeper and deeper down Alice in Wonderland’s rabbit hole. Whilst the agency started out by advertising all contracts for services and there was, by all accounts a rigorous procurement process to appoint an army of professionals, it seems these days that the agency is satisfied with a brief beauty contest before making appointments. Rumour has it that agents HT Meagher O’Reilly has been appointed by NAMA to let all the commercial property under its control in the south Docklands in Dublin.

full artical here at source:http://namawinelake.wordpress.com/2011/08/18/nama-appoints-company-to-sell-derek-quinlan%e2%80%99s-art-collection-a-company-which-the-european-commission-found-had-operated-a-cartel-which-defrauded-art-sellers-out-of-290m/

New Central Bank of Ireland figures show no slow-down in deposit flight

April 29, 2011

 by namawinelake

Figures released by the Central Bank of Ireland (CBI) this morning for the month of March 2011 show that the flight of deposits from Irish banks shows no sign of slowing down. From an Irish perspective, possibly the most significant figure to watch is the total of private sector deposits in the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS). The total which represents businesses and households fell to €106.3bn in March 2011 from €108.6bn in February 2011 and is now down €23bn from a year ago, €11bn since the IMF/EU bailout in November 2010 and €2.3bn down over the course of just one month. The CBI and ECB continue to provide substitute funding for Irish banks which replaces this flight of deposits and Irish banks continue to provide extensive State-backed guarantees on deposits. It remains to be seen if the pace of decline in deposits slowed after the bank restructuring announcements made after close of business on 31st March, 2011 – Minister Noonan indicated the early signs were encouraging but since then our sovereign bond yields have sky-rocketed again.

So, looking at the deposit figures produced by the CBI. First up is the consolidated picture for all banks operating in Ireland including those based in the IFSC which do not service the domestic economy.

Next up are the 20 banks which do service the domestic economy and include local subsidiaries of foreign banks like Danske, KBC and Rabobank. There is a list of all banks operating in Ireland here together with a note of the 20 that service the domestic economy.

And lastly the six State-guaranteed financial institutions (AIB, Anglo, Bank of Ireland, EBS, Irish Life and Permanent and INBS)

(1) Monetary Financial Institutions (MFIs) refers to credit institutions, as defined in Community Law, money market funds, and other resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs, and, for their own account (at least in economic terms), to grant credits and/or to make investments in securities. Since January 2009, credit institutions include Credit Unions as regulated by the Registrar of Credit Unions. Under ESA 95, the Eurosystem (including the Central Bank ofIreland) and other non-euro area national central banks are included in the MFI institutional sector. In the tables presented here, however, central banks are not included in the loans and deposits series with respect to MFI counterparties.

(2) NR Euro are Non-Resident European depositors

(3) NR Row are Non-Resident Rest of World depositors (ie outsideEurope)

source:http://namawinelake.wordpress.com/2011/04/29/new-central-bank-of-ireland-figures-show-no-slow-down-in-deposit-flight/

comment:

Just a few weeks ago Mr. Noonan reassured the public that “The total amount of deposits withdrawn from the pillar banks has been very significantly reduced”. And “the net deposit position of the Pillar Banks has improved significantly” So what’s new he was lying and I expect he will continue to lie to us over the next few years. This is what you get when you try to build so called Pillar Bank on the rotten foundations of corrupt and toxic banks in the first place!

Shut these toxic black holes down now!

Just what is stopping this palsied government?

By namawinelake 

“There is not one moment to be lost”
Labour Party Programme for Government, introduction
Okay, it was only 25th February, 2011 when we cast our votes in the general election and it was only 6th March, 2011 when Labour and Fine Gael (FG), who together had been tipped for months as the likely new coalition government, hammered out a deal for forming the new administration and it was only 9th March, 2011 when new Taoiseach, Enda Kenny formally picked up his medal/seal from the President confirming his appointment. But what we had a month ago was not a snap election, an election was firmly in the offing ever since the Greens (remember them?) announced with babes in arms on 22nd November, 2010, that they would be withdrawing from government imminently when certain bailout-related commitments were put in place. And even prior to that there had been a number of incidents last year – Willie O’Dea’s tribulations, Garglegate, the bombshell on 30th March when Minister Lenihan estimated Anglo’s bailout at €25bn, the controversial stag-hunting bill – which should have naturally put Opposition parties on an -election footing. The point is, that the new administration should have hit the ground running with policies and initiatives that had been developed over the previous months, if not indeed, years. This entry examines progress to date.
You might ask if it is too early to demand to see progress with a new government. After all they have just gotten their feet under the desks, why should we expect any real progress at this point? In response, not only should this administration have hit the ground running but it seems to be accepted as a truism that the first 100 days in a new government is when you start putting in place the reforms and developments which you intend seeing implemented. Okay, theoretically, the FG/Labour coalition will be in power for 1,800 days but most of this will be spent in the detailed implementation of policy and then ramping up for a re-election.
Looking at the Programme for Government, the document which sets out the jointly-agreed policy positions of Labour and FG, it is striking that practically no progress has been made. Take one example, the restoration of the minimum wage to €8.65 per hour – remember it was cut in January 2011 to €7.65 per hour in line with a commitment given in the IMF/EU bailout agreement, and it was to apply to new hires only. Given that both Labour and FG pledged the reversal of the cut in their individual manifestoes, the pledge then making it unaltered in the joint Programme for Government and given Labour and FG have 113 deputies in the 166-deputy Dail, not to mention the same commitment from others, Sinn Fein and United Left Alliance for example which comprises a further 19 deputies, then why has the new government failed to restore the minimum wage? Surely this is entirely within their control and doesn’t involve State expenditure. Curious.
Looking at the Finance commitments which of primary interest on here the Programme for Government, progress here is representative of progress across all the departmental portfolios, that is, there doesn’t appear to have been any.
(1) Renegotiate IMF/EU bailout – on hold, initial overtures rebuked apparently because the Taoiseach would not offer something in return, specifically in the area of corporate tax
(2) Structural reforms – none announced
(3) Replacing emergency ECB funding with medium term funding – there are rumours of a €60bn medium term fund custom-made for Ireland. Irish banks are in receipt of €180bn+ of short term funding at present from the ECB and Central Bank of Ireland. Will confidence be restored amongst investors if only one third of current short-term funding is converted into medium term funding?
(4) Ending further transfers to NAMA – On 7th March, 2011 AIB announced the transfer of €1.1bn of loans to NAMA. There has been no further public word on NAMA’s intentions with Paddy McKillen’s loans or with the sub-€20m exposures at AIB and Bank of Ireland.
(5) Increasing credit availability – nothing announced
(6) Introduction of special resolution regime for bank insolvencies – this was commenced by the previous administration on 28th February, 2011 with the publication of the CENTRAL BANK AND CREDIT INSTITUTIONS (RESOLUTION) BILL 2011 but as far as I can tell it has not been debated in the new Dail or progressed in any way.
(7) Disposal of public stakes in banks – nothing announced
(8) Creation of “integrated decision making process” to improve government responses to the financial crisis – well there is now a grouping of four – Taoiseach Enda Kenny, Tanaiste Eamon Gilmore, Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform, Brendan Howlin – but it is not clear how it is working and whether or not it has yet accomplished anything
(9) Restructuring banks boards and creating pools of suitable candidates – nothing announced
(10) Highest standards of transparency in the operation in NAMA – nothing announced. The NAMA quarter four, 2010 (year end) report is apparently already on Minister Noonan’s desk, a week before the due date of 31st March, 2011. How long will it take him to publish it?
(11) Establishment of a strategic bank – nothing announced
(12) Establishment of credit union commission – nothing announced
(13) Establishment of financial services taskforce to maximise employment and opportunities – nothing announced
(14) Investigation of banking failures – nothing announced
Michael Noonan has reportedly spent much time talking – talking domestically with the NTMA, Central Bank and his new staff at the Department of Finance and, I would expect, NAMA; talking internationally with the IMF, ECB, EU and Federal Reserve. Of course what is overshadowing the many micro-decisions that must be made, is the ongoing stress test, but I understand that the results have been known in general terms for a couple of weeks and there is now even reporting which claims the tests will show an additional capital requirement in the €20bn-zone, more than the €10bn that was to have been injected in February 2011 but less than the €35bn allowed for in the bailout. So why should the stress tests be holding up progress elsewhere?
Of course it is still unknown how “the market” will react to the stress tests when the results are published this Thursday but the betting is that regardless of the level of detail disclosed, there will still be some scepticism about future losses (and not just in Anglo and Irish Nationwide Building Society, neither of which is even being subjected to a stress test). And the big decisions facing Minister Noonan will closely involve the EU/ECB and to an extent, the IMF. But Minister Noonan must now at least know the broad parameters of the problem, and anyway why is that stopping progress elsewhere in his department.
So, as far as I can see, there is little outward sign of much life in the Department of Finance. New initiatives to deliver the commitments in the Programme for Government are also apparently absent from other ministries. Perhaps more than one month is needed to start the ball rolling but the urgency suggested by Labour’s spirited statement “there is not one moment to be lost” does seem to be at odds with the apparent lack of progress across all ministries including Finance.

source URL: http://wp.me/pNlCf-1cz

 

Comment:

Everybody I know that is in the markets is not taking a blind bit of notice of the 3rd stress tests

They believe that we will not get the real picture as we are now really playing a European game dictated by the German banks and the new Irish government is still going to stay the previous Fianna fail course .They have said as much by telling the Irish public that there will be no change for the next two years !

When the public finally realize this they will come out on to the streets but then it will be too late as we will have lost all our own funds in the National Pension Fund.

more New Year predictions!

It’s still January so perhaps we’re still in time for some more New Year predictions. There was a detailed entry on here a fortnight ago on residential property predictions for 2011 and indeed the summary prediction on here for Irish commercial property was that capital values would decline by a further 10% in 2011 bringing the cumulative fall from peak in 2007 to 64%. This entry examines the prospects for commercial property in some more detail by reference to property powerhouse and NAMA valuation panel member, CB Richard Ellis, who has this week produced its annual property outlook report.. Its outlook report for 2011 paints a mildly optimistic picture though it is far from Pollyanna-ish. The report covers Ireland, both North and the Republic and in lesser detail there is an outlook for the UK.The highlights:
(a) The distinction in performance between prime and non-prime locations/assets and Dublin/provincial locations will become more marked.
(b) Rents are predicted to fall in all sectors, the indication is that there will be modest capital increases for prime markets
(c) There will be more transactions as NAMA, banks, receivers and liquidators bring product to market amidst a stabilisation in returns
(d) Whilst credit will still be constrained, there is funding available for certain projects though foreign capital will feature prominently
(e) Whilst there is little new commercial space coming available, restructuring, retrenchment and business failure will mean the overall stock is unlikely to reduce to any significant degree
Omitted from the report is the potential for increased competition from the North which has dramatically lower property costs (CBRE quote prime office rents in the North at GBP 135 psm or €15 psf compared with ~€30 psf in Dublin) though there are signs of severe rent adjustment on this side of the border. The Irish Times yesterday reports on a significant new rental on Temple Bar’s Fleet Street in central Dublin. The 11,000 sq ft store, which will trade as a Tesco Express, is paying a reported €200,000 a year in rent, equivalent to €18 psf – this rent level represent the future in my opinion.
In February 2011 the UK will begin in earnest its attempt to lower the corporation tax rate for Northern Ireland. I would have said that the UK wouldn’t surmount the so-called Azores principle whereby the EU would block regional tax variations unless the region was fiscally balanced. Which Northern Ireland isn’t. But this doesn’t seem to be stopping Chancellor George Osborne and of course he will find willing supporters in the North and we may find fewer supporters in Europe. CBRE prominently cite the importance of the State’s 12.5% as a contributing factor in bolstering demand for commercial property.
Personally I think we may have another economic convulsion or two before we get out of the woods (deposit flight, another European crisis, further bank loan or derivative losses – take your pick). The hit-or-miss ESRI has this morning lowered its prediction/projection for GDP growth in 2011 to 1.5% (less than the Government’s 1.75%). Like the property market, the Irish economy currently has its own prime/non-prime sectors and whilst the export market is expected to thrive, domestic demand is expected to contract or at most, modestly grow.
We don’t get precise predictions from CBRE but the prediction here is that commercial property capital values in the State will drop 10% by reference to the JLL index (which is down some 60% already from peak). There may well be sectoral variances though I think that even prime property in Dublin will come down. Rents have been dropping by some 20%+ annualised during all of last year and I expect further drops in 2011 of 15-20%, again by reference to JLL’s series. Investment property transaction volumes and values will be up on the 29 worth €241m in 2010 – I wouldn’t be surprised by a doubling-plus in volumes and values.

source URL: http://wp.me/pNlCf-Xg

Irish commercial property prices continue to decline

From
Namawinelake
Jones Lang Lasalle (JLL) has published its commercial property series for Ireland for Q4, 2010 (free registration required). The JLL series is one of the two Irish commercial indices referenced by NAMA’s Long Term Economic Value Regulations (Schedule 2) and is used to help calculate the performance of NAMA’s “key markets data” shown at the top of this page. The other quarterly Irish price series is published by SCS/IPD but because it is generally published after JLL’s it is not used here but the index does historically show a close correlation with JLL’s.

 

The Index shows that capital values are continuing to decline and the pace of decline is picking up. The Index declined by 3.0% in Q4, 2010 compared with Q3, 2010. Overall since NAMA’s Valuation Date of 30th November, 2009 prices have declined by 11.7%. Commercial prices in Ireland are now 60.2% off their peak in Q3, 2007. On an annual basis prices are down by 10.5%. The NWL index is now at 897 which means that NAMA needs to see a blended increase of 11.5% in property prices across its portfolio to break even at a gross profit level (taking into account the fact that subordinated bonds will not need be honoured if NAMA makes a loss).

 

In terms of commercial components, Retail was down 3.3% in the quarter, Office was down 1.8% and Industrial was down 6.7%. JLL are, perhaps not surprisingly, upbeat about the figures saying that the 3% decline in Q4 is the smallest quarterly decline since 2007 – in fact they are talking about Q4 declines and I am not sure there is any seasonality to Irish commercial property prices. In 2010 prices declined as follows : Q1 (2.1%), Q2 (4.7%), Q3 (1.1%), Q4 (3%).

 

Quarter 4 was a momentous quarter in Irish economic history with an IMF bailout being rumored from mid-November and confirmed on 28th November. The two largest potential deals in Q4 seem to have fallen through (1) the €110-120m Royal Liver portfolio sale to TPG Capital/Green Property and (2) the €350m Liffey Valley Shopping Centre sale. In the first case the IMF bailout was blamed.
JLL report that rents fell by 5.6% in Q4 (ERV index of 645 versus 683 in Q3) which represents a slight pickup in the rate of decline in rents and the annual decline in rent is still 24.3%. With rents falling with 20%+ per annum and capital values still dropping the 8.67% yield currently available on Irish commercial property is, contrary to what JLL assert, not particularly attractive.

 

The outlook for 2011 is challenging. Hopefully NAMA and non-NAMA banks will bring more product to market. There should be some stabilization in the overall economy though domestic demand is likely to decline. Credit for Irish property is still scarce though there are reportedly pots of €10m available for quality assets with reliable rent rolls. The prediction on here is that capital prices will decline 10% this year.

source : http://wp.me/pNlCf-VD

2010 and the NAMA Fraud

A Review of NAMA in 2010
namawinelake | December 30, 2010 at 3:23 pm | Categories: NAMA | URL: http://wp.me/pNlCf-TR

It was Dr Michael Somers, the former head of the NTMA that highlighted a flaw in the Irish character in his speech at the MacGill Summer School in beautiful Donegal in July this year – the flaw being that we tend to focus on process in this country at the expense of objective. It would be unfair to say that NAMA has not achieved its objectives yet. After all this year was mostly going to have been about establishing the agency, recruiting staff, setting procedures and of course valuing and acquiring the target loans from the financial institutions. With loan acquisition, NAMA missed its target (set out in the draft NAMA Business Plan in October 2009) of transferring the first tranche in December 2009 (actually transferred on 10th May, 2010) and to have completed the transfers of €77bn of loans in July 2010 (€71bn of loans have been transferred to date, though only 60% have been subjected to granular due diligence and valuation).  But overall NAMA has transferred a colossal volume of loans, €27bn of which have been agreed by the EU and with the loan acquisition process being described as “reasonable” by the Comptroller. NAMA has paid banks some €30.2bn of bonds (presumably 5% are subordinated bonds which will only be honoured if NAMA makes a profit) which are exchangeable for cash equivalent and can be made available for lending to the wider economy. Although up-to-date numbers are not available, it is likely that NAMA has spent close to €200m on professional fees in 2010 having conducted massive procurement exercises. The agency has an estimated headcount of 100 at the end of the year. The curious legal case involving Paddy McKillen was comprehensively beaten at the High Court and the betting is that the appeal to the Supreme Court will not be successful for Paddy. The NAMA CEO and Chairman have spread NAMA’s message positively from Belfast to Kerry, from Galway to the committee rooms of the Oireachtas (here and here), from the BBC to RTE (though it was the Economist that gave NAMA the greatest leg-up by saying “In the long run Ireland’s response is the better” in August 2010). And all in all, the agency has avoided scandal during its first 12 months of operation. So as processes go, the acquisition phase of NAMA’s existence can be judged a qualified success.
And the acquisition phase is important to NAMA’s success – the oft-repeated rule for the house flipper – “you make your profit when you buy” – is relevant to NAMA also. But it is the next phase, the management and disposal of assets, that will determine NAMA’s overall success and the early indications are not good. Bear in mind that the first tranche had started to transfer in March 2010 and was completely absorbed by the agency on 10th May, 2010 – that’s nearly eight months ago. Information reaching here suggests that not one of the first 10 business plans has been agreed, that is, signed by both the developer and NAMA. So much for NAMA’s claim that developers need submit plans within 30 days of their loans being acquired and that NAMA would determine in less than three months how to proceed with the borrower. And remember that in this phase NAMA controls practically all of the cards, unless the Construction Industry Federation wakes up to its responsibility in providing a united voice for developers. In the next phase, NAMA will be operating alongside the mighty beast that is “the market”. And whilst markets can be irrational, exuberant and dysfunctional they tend to be objective driven in terms of financial bottom lines. And that may well be the story of 2011 – the process-driven agency versus the objective-driven market. But that will be the subject of another entry.
Meanwhile, I give you yet another end-of-year review of NAMA, more comprehensive than most (if not all) and penned by a blog which focusses on the agency.
NAMA month by month
January 2010 – A quiet month for NAMA with the application for EU approval being submitted just before Christmas 2009, the valuation panel being appointed in December 2009 and loans being valued. Irish Times property pundits suggest that residential property would drop by 10% in 2010 with a pick up in prices in the second half. We’ll get to see how accurate they were when the limited Permanent TSB/ESRI house price series for Quarter 4, 2010 is produced at the end of January 2011.
February – Despite the best efforts of FG’s Senator Eugene Regan, the man from Brussels says “yes” to NAMA with the redacted decision published in April. News from the commercial court that a field in Athlone valued previously at €31m was now worth €600,000 – although far more difficult to index Savills claim later in the year that on average, development land has fallen 75-90% from peak.
March – the first tranche begins to transfer by 31st March (just about  with only €0.37bn of loans from EBS and INBS transferred). We learn that NAMA is to acquire €36bn of loans from Anglo, up €8bn from a few months before and indeed that €36bn may well grow now that NAMA is considering acquiring Anglo’s land and development exposures of €0-5m. The publication of the NAMA Long Term Economic Value regulation tells us that NAMA is prevented from using data produced after 10th January, 2010 when assessing LEV – oh dear. Information continues to leak from NAMA to selected media outlets. Hopes for NAMA developer, the John J Fleming group flounder as a judge characterises its examinership plan for survival as “an aspiration based on hope”. We ended the year with news that John Fleming himself was seeking bankruptcy from his current base in Essex in the UK. The third of three major studies into vacant housing concludes we may have 350,000 of vacant homes, more than 150,000 than we should have. The Ghost Estates review published in October 2010 suggests that there are some 30,000 vacant new homes on certain estates.
April – NAMA at the Oireachtas – we’re all very impressed with Brendan McDonough. Information Commissioner Emily O’Reilly is the latest to demand that NAMA be brought under the umbrella of the Freedom of Information legislation – demands thus far rejected by the Minister for Finance. NAMA issues details of the bonds and subordinated debt it is giving to banks in exchange for loans – the interest rate on the subordinated debt is tied to the rate on the 10-year bond rate (9% as of today) – nasty. Spousal transfers come into focus – not for the first time nor the last. The image of bulldozers reversing the construction boom hoves into view as NAMA confirms that some developments will meet their fate with a JCB. News that Grafton Street rents have fallen by 44% in one year, though they are still falling by 20% per annum. Brian Lenihan tells us that we can now buy homes with confidence with prices being realistic.
May – Tranche 1 completed. NAMA Chairman, Frank Daly forced to clarify comments in a speech to the Association of Compliance Officers – he didn’t mean to suggest NAMA would stop pursuing developers once it had recovered the amount NAMA paid for the loan. It costs €500 a year to maintain the NAMA website – really, that much? NAMA given a €250m recoupable working capital buffer advance which it manages to repay in October. Former IMF bigwig, Steven Seeling, joins the NAMA board.  Developer Simon Kelly tells the Independent that there’s no point in NAMA taking back developers’ cars because they’re a drop in the ocean compared with the amounts owing – and judging by the wheels on show in December’s Prime Time Investigates, NAMA agrees with him. NAMA makes some friends in Belfast.
June – Minister for Finance, Brian Lenihan tells the Oireachtas that despite the decline in values of Irish property since November, 2009 (the NAMA valuation date), the fact that NAMA’s portfolio includes other national markets means the effect of property value changes since November 2009 on NAMA’s loans has been “broadly neutral”. NAMA’s importance to the hotel sector is becoming apparent and indeed it seems that NAMA will have control over some 90 hotels in the State when it is finished with acquiring loans. Paddy McKillen’s Maybourne assets (Claridge’s, the Connaught and the Berkeley hotels in London) come into focus with reports that he is seeking to refinance the group and avoid NAMA – still no update as of today with debt repayment due by the end of December 2010. The IMF urges NAMA to begin disposals sooner rather than later – that was during a routine visit, what’s the IMF position now that they control the bailout? The Sunday Tribune claims NAMA CEO, Brendan McDonagh is on €500,000 a year. The RICS describes NAMA as a “thunderous cloud that overhangs the property market”
July – NAMA publishes its Business Plan – is that it? Dr Michael Somers, former head of the NTMA, attacks NAMA at the MacGill Summer School – NAMA is “bizarre” says Michael. The Mail on Sunday publishes story about NAMA’s Head of Portfolio Management, John Mulcahy, allegedly accepting hospitality on the yacht of the former owner of the Glass Bottle site, Paul Coulson. Paddy Kelly sticks the boot into John at the MacGill Summer School when he reveals that John valued Burlington Plaza at €350m in 2007. Deputy Frank Fahey entertains us all with his grasp of how NAMA bonds operate. NAMA publishes Quarter 1 accounts – loss of €7m. NAMA publishes Codes of Practice. Willie O’Dea suffering fierce stress worried that he might break NAMA’s anti-lobbying rules.
August – EU approves Tranche 1. Tranche 2 complete. Northern Irish Finance and Personnel Minister, Sammy Wilson, gives NAMA a thumbs-up. Top 10 developer, Cosgrave, gets planning permission for 1,500 dwellings in Dun Laoghaire. Suggestion that Dr Peter Bacon has been appointed as an adviser to NAMA, having been one of its conceptual architects. Start of the saga involving Top 20 developer, Paddy Kelly’s BMW 745i, repossessed by ACC, then returned with an apology only to be taken again in December. Sean Dunne, the Bane of Belle Haven, secures planning permission on land bought for €197m an acre in Ballsbridge.
September – NAMA at Cantillon and Galway. NAMA launches €5bn funding  programme which now seems to have been abandoned. Big Bang announcement for the future of Irish banking sees NAMA abandon €5-20m exposures at AIB and BoI (later reversed by the IMF) and NAMA provide estimates of final discounts (67% for Anglo, 60% for AIB yet only 42% for BoI). The massive scope of NAMA’s operations in Northern Ireland is laid out. Both the Credit Review Office and the Irish Small and Medium Sized Enterprises Association report better credit availability. NAMA abandons Tranche 3. More details on the investors in the NAMA Special Purpose Vehicle as we find out that counter staff at AIB have put part of their pensions on the line. Rumours about NAMA’s first British sale with Derek Quinlan’s Mayfair carpark (understood to have stalled but is likely to be sold in 2011). Irish bond rates skyrocket which pushes up the price NAMA pays for loans. Liam Carroll’s Anglo HQ finally secures planning permission.
October – NAMA gets into hot water over developer salaries and seems to clarify that it doesn’t pay more than €200,000 per annum. NAMA’s under-resourcing is criticised by McDonalds chief. NAMA pays just €38m for the €288m loans in respect of the Glass Bottle site. NAMA obtains judgment against Paddy Shovlin and the Fitzpatrick brothers. Ratings agency Fitch say that NAMA may break even because of the deep discounts it is applying to loans. The court case of the year gets underway as Paddy McKillen seeks to have NAMA’s treatment of his loans reviewed. Paddy loses his case comprehensively though he has appealed to the Supreme Court and a decision is expected in January 2011.
November – NAMA at the Committee of Public Accounts. CIF commission report that is nasty to NAMA and NAMA responds in kind.  EU approves Tranche 2. IMF bailout extends NAMA scope to include €0-20m exposures at AIB and BoI. NAMA lawyers up with the appointment of insolvency practitioners. Bernard McNamara’s property empire starts to implode with NAMA appointing receivers to Michael McNamara construction and Radora. Comptroller and Auditor General’s haphazardly produced report on NAMA judges the agency “reasonable” in its loan acquisition phase. Liquidator appointed to the Pierse group. NAMA’s Q2, 2010 accounts produced which show a year to date loss of €1m but should have shown a loss of €600m. NAMA repays €250m advance from the government. NAMA’s most valuable asset, the Battersea Power Station site, gets planning permission.
December – NAMA announces that it has acquired €71.2bn of loans at par value and paid €30.2bn in consideration. The NAMA CEO’s comments about the banks at the Committee of Public Accounts promise to develop legs in the New Year amidst apparent claims by the Committee that it was misled. Blackstone gives us a taste of the sort of characters NAMA will need engage with in 2011 and beyond. The Whelan Group is liquidated but we need wait until early January 2011 to find out what will happen to McInerney.
Performance against objectives (NAMA doesn’t have formal objectives so what follows is subjective)
(1) Facilitating lending – difficult to say because there are a number of factors that affect lending and the needs of the wider economy (demand for lending) is arguably more important than banks’ ability to lend (supply). The Credit Review Office and the Irish Small and Medium Enterprises Association (ISME) both support the proposition that lending conditions for businesses are improving. That said, the economy has suffered a severe contraction, is likely to have stagnated in 2010 and with a prospect of marginal growth in 2011 (0.9-1.75% growth in GDP according to the EU/IMF/government) so demand for credit is subdued. And the outlook might make NAMA irrelevant – if Irish banks have to deleverage by cutting lending by €90bn in the next three years and if deposits continue to flee to perceived safer havens, then NAMA may be of only marginal significance to the factors affecting lending.
(2) Making a profit for taxpayers – too early to say. But NAMA is likely to have made a loss of €1bn+ in the first year which is concealed by NAMA not revaluing its loans (valued by reference to November 2009 and uplifted by an average of 10% for “long term economic value”). The hope must be that conditions improve over NAMA’s lifetime and that NAMA judiciously manages its vast portfolio so that a profit can be returned to the taxpayer. I would have said that it is too early to have an informed opinion on NAMA’s profitability prospects but I would be cautious. As indicated by the NWL index at the top of this page, the markets in which NAMA operates need increase in value by a weighted average of 10% (from 912 to 1000) for NAMA to break even at a gross profit level.
(3) Creating certainty about banks balance sheets – again NAMA has done its job reasonably well with valuing some 60% of the €71bn of loans it has acquired at a granular level and with some 40% of the valuations of the €71bn being approved by the EU. The difficulty is that, even after NAMA has completed its acquisitions (non land and development), banks will still have some €70bn of commercial property loans on their books and another €70bn of non-property commercial lending plus €120bn of personal lending including mortgages. And don’t mention off balancesheet exposures like derivatives. So no, there is not certainty in the banks’ balance sheets but that is not NAMA’s fault. I have some faith in the IMF-mandated exercise to examine non-NAMA loans and off balancesheet exposures in the first quarter of 2011.
(4) Stabilising property/construction sector – a flaw in the NAMA concept and one not apparently considered by Dr Peter Bacon, one of NAMA’s conceptual architects, was that the property market may not be at the bottom or indeed close to it. Property prices in Ireland have continued to decline this year (gradually according to the very limited Permanent TSB/ERI house prices series, more so according to the commercial indices). Looking forward, it is hard to see any recovery in house prices in the short term and despite the brave assertions of the commercial sector, rents are plummeting (20% per annum) and that presages capital values continuing to fall (already 60% off peak values). Yes other markets where NAMA has 33% of its assets show a mixed picture, increases in the UK, Far East and US, falls in Europe, Middle East and some exotic locales like Cape Verde. But in Ireland the picture has been almost universally negative. NAMA has arguably interfered with the natural trajectory of prices and stalled firesales but it has not halted the underlying decline in prices as the country responds to what is a depression.

source http://namawinelake.wordpress.com/author/namawinelake/

comment:

There is no getting away from it NAMA is by  far the worst fraud committed on the Irish people and the perpetrators will have to face the people just like Nicolae Ceausescu had to do when his time was up .No matter how out of touch politicians are with the people at some point the people show who really is master!

State has injected a further €525m into EBS

The Irish Times

CIARA O’BRIEN

The Government has injected a further €525 million into EBS Building Society, it was confirmed today.

The new funding comes through special investment shares issued to Minister for Finance Brian Lenihan. The shares give Mr Lenihan control of the building society, including the composition of theboard and passing of members’ resolutions.

The latest funding means EBS will meet the core tier 1 capital ratio of 8 per cent by December 31st.

The institution was told by the Central Bank in March to raise €875 million by the end of December. However, in November it told the building society it needed to increase its capital ratio to 13.5 per cent by the end of the year, meaning it needs to find an additional €438 million. The Central Bank today said it has since extended that deadline to the end of February.

Other lenders had been given until at least the end of February to achieve new targets, set on November 28th.

EBS, which the government is currently looking to sell, has already received €100 million in funding from the State in the form of a promissory note, and a €250 million injection through the issuance of special investment shares.

Irish Life & Permanent and Dublin-based private equity group Cardinal Asset Management are currently bidding to buy EBS. FInal bids are expected to be in next week.

New legislation coming before the Dáil today will give the Minister for Finance new powers that would allow the Government to inject further funds required if the EBS is not sold.

source http://www.irishtimes.com/newspaper/breaking/2010/1215/breaking8.html

The Irish Times (above) reports this morning that the State has injected a further €525m into EBS. This is in addition to the €100m in cash injected in the building society in May 2010 and the €250m injected via a promissory note in June 2010 (Ciara O’Brien gets the two mixed up in her Irish Times article).
What this means is that the €875m that was flagged as the additional capital requirement in the Financial Regulator’s PCAR in March 2010 has now 100% been provided by the State whereas previously there had been a suggestion that a third party, perhaps one of the two remaining bidders for EBS (Irish Life and Permanent and the Cardinal Consortium) might stump up some of the requirement. The €875m was provided as follows (a) €100m in cash in May 2010 (b) €250m in promissory notes in June 2010 and (c) €525m in cash in December 2010. The PLAR published by the Financial Regulator on 28th November, 2010 signalled that EBS would need raise a further €438m by 28th February 2011 (that’s on top of the €875m) and the betting would be that the State will need pony up that also. And where did the €525m just now injected in EBS come from? That would seem to be from either the NTMA cash balance (the “fully funded until the middle of next year” money) or from the NPRF (whose €17bn unencumbered funds might have been made available for running the State but instead are being shoveled into the banks).
The €875m that has been shoveled into EBS so far (and the additional €438m that will be burned there by the end of February 2011 – shoveling and burning imply some sort of constructive locomotion but alas it’s merely loco as the money is unlikely to be even partially recovered) are as nothing though compared with Allied Irish Banks (AIB) which will require a further c€3.7bn in the next two weeks to meet the PCAR (Sept 2010 version) and will need an additional c€2.5bn by the end of February 2011 to bring the overall State investment in AIB to €12.745bn approx (€3.78bn already invested in preference shares and share acquisition costs, €3.7bn in the next two weeks and €5.265bn by the end of February 2011 and that’s on top of €3.4bn generated by AIB through disposing of its Polish Bank Zachodni and US M&T stakes). The €3.7bn in the next two weeks is also likely to come from the NTMA strategic reserve or the NPRF.
I think it is noteworthy that EBS has been provided with its 31st December 2010 PCAR requirement two weeks early whereas AIB which is in the wars with its bonus controversy will seemingly wait until the fuss has died down before it is gifted its €3.7bn.
Bank of Ireland appears to be okay for the next two weeks though my strong view is that NAMA’s absorption of the sub €20m exposures will create a further, thus-far undeclared, hole in BoI’s capital. NAMA, BoI, the Financial Regulator and the Department of Finance seem to be working on the basis that the remaining tranche for BoI would attract a 42% (40% in one ministerial statement) haircut. Confidential messages received here indicate that there will be some horror stories that will be uncovered by NAMA and that there is no genuine reason for BoI’s smaller exposures to have a lesser haircut than AIB’s (which according to the September 2010 estimates, the latest available, is to be 60%).
Irish Life also appears okay for the time being and has exceptionally been given until May 2010 to find €243m of capital and the betting is that it can do this without recourse to the State.
And that leaves the two lead-zombies in our financial landscape – Anglo and Irish Nationwide Building Society (INBS). The bailout cost for INBS went from €2.7bn in April 2010 to €3.2bn in August 2010 to €5.4bn in September 2010. The €5.4bn is on the basis that NAMA applies a 70% discount to INBS’s last tranche and that there are no additional unprovisioned losses on the remaining €2.6bn of non-NAMA loans (the last recorded provision on these was €0.2bn). You would hope that at this stage there is limited further downside with INBS but (a) their non-NAMA loan provisions look low and (b) as with the other banks there is concern over undiscovered losses with derivatives.
And so to the chief-zombie, Anglo. My understanding is that NAMA has transferred practically all of Anglo’s NAMA loans though NAMA has not issued a statement on the matter (it found the time to issue a lengthy reply to the CIF-comissioned hatchet job on the agency but not the time to report on a transfer that was flagged as urgent at the end of September 2010). Paddy McKillen’s estimated €900m of lending is still with Anglo pending the outcome of the appeal which is starts today in Dublin’s Supreme Court, but my understanding is practically everything else has been absorbed. So is NAMA able to confirm the final (estimated, pending full due diligence by the end of March 2011) discount? Is it 67% (I understand it is) or as high as the worst case scenario of 70%? And how is Anglo getting on with its €38bn of non-NAMA loans? Has the outlook improved on these (mostly commercial property non-land and development, half located in Ireland and one third in the UK and remainder in the US) loans?
 
And remember that Anglo and INBS have thus far been mostly funded with promissory notes (IOUs signed by the Minister for Finance and deemed good enough for Core Tier 1 capital by our Financial Regulator). These IOUs need to be converted to real money and a long-held concern on here was that there would be frontloading of the conversion to cash, not a convenient 1/10th per annum for the next 10 years. So what will the shoveling profile be for the promissory notes?
The great concern with the present shoveling is that it is depleting real money from the NTMA (the “fully funded to the middle of next year” reserve) and the NPRF. And should the actual cost of rescuing the banks increase and we need an additional bailout, we may find that we have sacrificed our strategic reserves and will be left effectively seeking funding from a “beggars can’t be choosers” position or a messy default.

source https://mail.google.com/mail/?hl=en&shva=1#inbox/12cea0c727190daf

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