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Posts tagged ‘NTMA’

IRELAND HAS JUST DESTROYED €500M – WHO CARES

By Diarmuid O’Flynn

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When Michael Noonan announced his Promissory Notes ‘deal’ in February of last year it was hailed by our media as a triumph. ‘Promissory Notes destroyed!’ screamed the headlines; ‘€20bn saved over the next ten years!’

Big news indeed, but what our media didn’t tell us was even bigger.

1) The Promissory Notes were indeed destroyed, the little bits of paper the ECB had accepted at their convenience to bail out the European big-bank creditors of two bust Irish banks, Anglo and Irish Nationwide; the Promissory Notes debt wasn’t, not a cent of it.

2) On the €20bn ‘saved’ over the next ten years – absolutely not true. If you buy an item that’s been reduced from €40 to €20, you have saved €20; if you alter a debt schedule so that you pay €20bn less in the next ten years but pay €60bn over the following 30 years, that is not ‘saving’ €20bn.

THE REAL NOONAN DEAL

What Michael Noonan did was this; to take the pressure off his budget for the remaining years of this government from 2012 onwards (because had had actually pulled this same stunt for the 2012 Promissory Note – a practice run, if you like), he restructured the Promissory Notes payment schedule such that the burden of payment would be shifted from this generation to the next, and to the next. No more no less. 

It was betrayal, not just on a national level but on a human level – what parent, rather than challenging ‘totally’ illegal debt (Michael Noonan’s own description of the Promissory Notes), debt he had previously eloquently and forcefully rejected and simply to make life easier for themselves, passes the burden of payment to their own children and grandchildren? Under the terms of this deal, that is what Michael Noonan has done but not just on his own behalf – on behalf of us all. Thanks to Michael Noonan, that is the legacy of this generation of Irish people to the next.

BURNING BILLIONS

There was something else we weren’t told, either by Michael Noonan or by our media, something of even greater import.

The money raised from the sale of the new Promissory Notes bonds, all €28bn of it (including the €3bn from the 2012 bond) is destroyed, every cent of it. Why? Why is a broke, massively-indebted small nation destroying the equivalent of the entire tax intake for 2010, the year the Promissory Notes were issued? Because the ECB, who facilitated the original issuance of those notes (feared contagion across Europe if any bank in the EuroZone was allowed fail), is insisting that the entire €31bn printed that year by the Central Bank of Ireland and given directly to the two bust banks to bail out their creditors, must now be taken back out of circulation. By us.

And it has started.

Buried in the back end of a report from RTE yesterday, Tuesday December 22nd, an early Christmas present for the nation. Again, as has become so typical for the official spinner of government half-truths, it wasn’t so much what was said, it was what was left unsaid.

‘Separately, the NTMA has announced the cancellation of €500m worth of bonds relating to the Irish Bank Resolution Corporation. The Irish Floating Rate Treasury Bond was issued as part of an arrangement that saw the Anglo Irish Bank promissory note replaced with new debt. Its issuance was part of the process that has ultimately led to IBRC’s liquidation. Today the NTMA purchased €500m worth of the bond – which was due to mature in mid-2038 – from the Central Bank. It said the cancellation of this amount will leave €1.5bn worth of the bond outstanding.’

Reading the above, would you have any idea that this country has just borrowed and destroyed €500m, dwarfing what’s going to be raised from the ill-fated (it will fall) Water Tax? But we have. ‘Cancellation’, that’s what the RTE report says; ‘destruction’, that’s what it means.

3-in-1

But there’s more – it’s a triple-whammy. As soon as that €500m was received by Patrick Honahan in the Central Bank on Tuesday:

  1. It was destroyed
  2. We start paying interest on it
  3. In 2038 the new bondholder (wouldn’t it be some irony if it’s one of the same bondholders we bailed out back in 2010???) will come looking for the entire €500m principal to be repaid.

JUST THE START

The €500m borrowed/burned on Tue is just the start of the new Noonan P Note bond schedule.

  • 2014-18 (incl – five years): €500m/yr borrowed/burned
  • 2019- 23 (incl – five years): €1,000m/yr borrowed/burned
  • 2024- 31 (incl – eight years): €2,000m/yr borrowed/burned
  • 2032: €1,500m borrowed/burned
  • Meanwhile, €3bn bond from 2012 also sold, those billions also destroyed.
  • And all the while, as the bonds are sold the debt-clock ticks faster and faster, the interest increasing, the debt-burden piling up. Over the next 40 years, on the entire €31bn, we won’t have any change from €80bn. Some legacy.

No matter how you read it, it’s obscene.

In Ballyhea we’ve been protesting this for nearly four years, joined now every week in their own places in that protest by Charleville, Ratoath, Dublin. This coming Sunday, December 28th, is our 200th week. If this has angered you enough, if you have the time and the inclination, you’re welcome to join us in Ballyhea – 11.30am, at the church car-park.

EU confirms that Ireland will need to return to the bond markets next year

by namawinelake

There was a tongue-in-cheek entry on here during the week on the appearance of a new category heading on the debt maturity profile webpage of the NTMA. The new heading of “Liquid assets” had a garish “Barney the Dinosaur” shading and a little fun was had at the expense of the NTMA who had inserted an asterisk after the heading “Liquid assets” but not explained what the asterisk meant. There has been a short reply from the NTMA to say that it has now removed the asterisk and that “Liquid assets” refers to “Exchequer, Deposits and CSRA [Capital Services Redemption Account] account balances”. I am still awaiting a response to a follow-up query which asks if these funds are 100% available for debt redemption and what will happen in 2012 when then the funds will be exhausted. Although the entry was an attempt at some light-hearted relief, it had a more serious edge in asking how Ireland was going to fund debt that was maturing in coming years. And lo and behold, the EU produces a document yesterday which gives us the answer – we need return to the bond markets next year, in fact in a little over 12 months.
The report “The Economic Adjustment Programme for Ireland” written by the Staff of the Directorate-General for Economic and Financial Affairs is described as an occasional paper but we can expect similar reviews in future as part of our participation in the EFSF/EFSM bailout. It seems ludicrous but this document is the first publicly available that has a serious stab at addressing how Ireland is to fund its deficit AND maturing debt in the coming years. And it seems to confirm what has been suggested on here for some time – the €85bn bailout is not enough* to fund the State to 2014 and we will need return to the debt markets earlier – 2012 according to this report which says (PDF page 41)
“The Irish government does not need to tap international bond markets until the second half of 2012, but will gradually return to the markets thereafter. Available funds allow financing fiscal needs amounting to some €30 bn until end-2011, €17 bn in 2012 and €2 bn in 2013. Underlying this are assumptions of roll-over rates of maturing long-term debt of 0% until end-2011, 20% in 2012, and 80% in 2013. A further conservative estimate underlying the programme is that the rollover of short-term debt is significantly impaired in 2011 and access to private short-term debt funding will be restored only gradually.”
The maturing debt according to the NTMA this morning is €13.679bn in 2011, €6.852bn in 2012, €7.137bn in 2013 and €12.964bn in 2014. So it would seem the return to the bond markets in 2012 might be limited. That said, recent GDP projections seem to be consistently undercutting the government’s projections. And I see nowhere a reference to financing needs at NAMA (€5bn, and I note that the NAMA website still says that “Programme details will be published in Q4 2010” in respect of what I understand to be its abandoned medium debt programme) The elephant in the room (or should that be purple dinosaur!) is the future treatment of ECB and CBI emergency liquidity assistance. We can hope that funding markets regain confidence in Irish banks but if not, will the €180bn+ overdraft from the ECB and CBI today need be turned into a term-loan and added to the bailout?
And lastly, this is a politically impartial blog but it seems that the political mantras “we are fully funded to 2014” and “we won’t need return to the bond markets until 2014” are just plain false, which has been clear on here for some time but now the EC has confirmed the need to return early to the markets for funding. Given we are in the midst of a general election campaign, perhaps we might get some constructive and better informed debate on our debt options.
* The €85bn bailout is earmarked for deficit funding (€50bn) and bank capitalisation (up to €35bn). Central Bank governor, Patrick Honohan continues to claim that the bank recapitalisations might be contained in €10bn and that €25bn of the bailout might not therefore be needed. Others have suggested that we will need more than €35bn. The current stress testing of the banks might help clarify the position. There are two main reasons on here for suggesting the €85bn is inadequate – debt redemption of some €38bn in 2011-2014 and the expected need to replace ECB and CBI ELA with State funds.

source:  http://wp.me/pNlCf-12O

Comment:

Again the lies of the current Government have been exposed we were supposed to have taken the IMF/EU bailout in order to be able to stay away from the Bond market for up to 4 years and now we see that we will need to go back in less than 12 months

Is there any credibility in anything any of the established political parties now say?

Roll on “Independence Day” when the people of Ireland will have real people looking at the books!

We need to know the real story and this drip drip feed is only prolonging the severity of the financial crises .The markets need clarity and there will be no recovery until the totally bankrupt Lenihan and his band of misfits in the Department of Finance get the boot.

We the people deserve to be told the truth however bad it is !

NAMA’s report and accounts for Q3,2010 – Ten things to look out for

NAMA’s report and accounts for Q3,2010 – Ten things to look out for
namawinelake | January 7, 2011 at 3:06 pm | Categories: NAMA | URL: http://wp.me/pNlCf-V0

NAMA’s first set of accounts for the period ending 31st March, 2010 were delivered to the Department of Finance at the end of June 2010 in accordance with the timescales set out in section 55 of the NAMA Act and were published on 7th July, 2010. The second set of accounts for Q2, 2010 were presumably delivered by the end of September 2010 and published on 2nd November, 2010. When will the Q3, 2010 accounts, that were due to be delivered by NAMA to DoF by the end of December 2010, be published? Going on the limited experience of Q1 and Q2, anytime between now and the first week of February. This entry looks ahead to what NAMA’s report for Q3, 2010 might reveal.
(1) NAMA is likely to show a profit for Q3 (it reported a loss of €7m for Q1 and profit of €6m for Q2). But the number one question that should be asked of NAMA is “what loss would you show if you revalued your loan assets”. My estimate of the loss would be in the €2-3bn range. Why? Because NAMA is valuing loans according to property values at November 2009 (and paying a Long Term Economic Value premium of some 10% to boot). Although some NAMA markets (UK commercial property, Far East property and some US micro-markets) have improved, two thirds of NAMA loan assets are located in Ireland where both residential and commercial are down some 10% since November 2009. Revalue those NAMA loans according to September 2010 values and you will see a revaluation loss in the order of €2-3bn (very roughly by the end of Q3, NAMA had  T1, T2 and most of T3 totalling some €18bn at NAMA-consideration value or €16bn without LEV and that two thirds had dropped by 10% and one third had risen by 10%). NAMA is unlikely to have revalued its loan assets on a quarterly basis so that loss is unlikely to be shown anywhere in the Q3 accounts but it should be the subject of the number one question put to NAMA and the DoF when the accounts are published. “At the time it was set up in 2009 people were saying that Nama would lose money, but it hasn’t. They said that it would pay over the odds for loans, and again it hasn’t.” said Green Party minister, John Gormley, in an interview with the Independent last week – sadly he is wrong on both counts, but he might be forgiven by NAMA not revaluing loans on a quarterly basis. Of course it should be stressed that revaluation losses are “paper losses” and property prices might recover and erase any temporary loss.
(2) Derivative losses: In just two days to the end of March 2010, NAMA managed to make a loss of €1.4m on derivatives it had taken over from the banks. And in Q2, the agency racked up additional derivative losses of €60.335m (note 6 on page 26). These losses were reported as “paper losses” because they simply reflected the movement in NAMA’s exposure which could theoretically reverse in future. I can’t help but worry that there is a hornets nest here which might swell into colossal losses in future periods and it is all the more frustrating because so little information has been released on the nature of these derivatives that NAMA is absorbing. NAMA engaged an experienced third party bank, Societe General, to help it value derivative exposures being absorbed.
(3) Repayments of capital: By the end of September 2010, NAMA had taken over loans at an estimated par value of some €40bn (it’s unclear because Tranche 3 was abandoned on 30th September 2010 but is likely to have substantially transferred anyway). NAMA said before Christmas that it had approved the sale of €1.6bn of assets (upto €2bn according to the NTMA’s statement today). Surely some substantial capital was repaid. In Q2, NAMA saw €117m being repaid in cash by developers though NAMA did not split this between interest generated in Q2 and capital repayments. But we can surely expect to see some substantial “low lying fruit” capital repayment to the end of September 2010.
(4) Interest received: From inception to the end of June, 2010 NAMA generated €91m in interest from developers. Practically all of this was generated in Q2. but it is unclear from NAMA’s accounts how much of this was paid in cash to NAMA. This interest receivable figure should increase substantially in Q3.
(5) Working capital advances to developers: In Q2, NAMA made €47m available to developers. This figure is set to increase with more cash starved projects being transferred to the agency in Q3. In October 2010, NAMA repaid the €250m loan it received from the Department of Finance in May 2010 (together with interest of €1,065,625) so any further advances from NAMA are likely to have been made from loan and interest repayments from developers. NAMA’s funding programmes seem to have been abandoned for the time being but the next report might give some clarity as to how the €5bn provided for in the NAMA Act is to be raised by NAMA.
(6) Legal cases. Now this should be interesting because NAMA is required to set out details of legal cases with which it is involved. And memorably NAMA was rattling its saber at the start of September, 2010 boldly asserting that it would be taking action against 12 developers involving €300m imminently. Even if the cases are commenced by proxy by NAMA Participating Institutions, it should be the case that NAMA provides details. In terms of formal cases involving NAMA there was (i) the successful application for an order against Paddy Shovlin and the Fitzpatrick brothers (ii) the successful defence against Paddy McKillen (iii) the case where NAMA is listed as an interested party where Clare developers, John Flanagan and Gerard Lillis are contesting the appointment of NAMA Board member Brian McEnery as a receiver to their companies and a declaration that Anglo and NAMA are “amenable to judicial review”.  I believe this last case (referenced 2010/967 JR at the High Court) is still outstanding. In November and December 2010, NAMA successfully sought the appointment of receivers to two Bernard McNamara companies and to Paddy Doyle and Paddy Burke companies and a liquidator was appointed to the Whelan group.
(7) Performing loans. NAMA has now more or less given a working definition of what it means by performing loans – operating in accordance with loan agreements AND repaying interest AND arrears of no more than 30 days. In the October 2009 draft Business Plan the predicted % of loans that would be performing was 40%, this had fallen to 33% by April 2010 and was 25% in the June 2010 Business Plan but was up at 29% In June 2010 by reference to the par value of the loan.
(8) Breakdown of loans received: How many loans were bought for zero consideration. Just as interesting, how many were bought with practically no haircut whatsoever. Remember NAMA has not produced any information on tranches since completing the acquisition of the Tranche 2 in August 2010. Tranche 3 was abandoned in September 2010 and although we have had mini-tranche updates from AIB in November and December 2010, there is likely to have been substantial loan acquisition in August and September that hasn’t hitherto been reported.
(9) Professional fees: I don’t think people generally realise the extent of the vast army of firms providing services to NAMA. 64 firms of solicitors in Ireland alone, another 8 in the UK, 30-odd valuation companies,  the outsourcing giant Capita and individual organisations providing a host of other services. It is truly immense and so also are the fees. NAMA was expecting to have operating costs of €240m in its first year of operation. It is difficult to tell how much has been spent and on what companies from NAMA’s accounting treatment of these costs which are sometimes charged to the Profit and Loss account and sometimes to the Balance Sheet but the next report might provide some detailed information.
(10) Accounting transparency. I must say, putting on an accountant’s hat, that it is quite difficult to extract information from NAMA’s accounts. That is partly due to there being six-odd companies in the group and a lot of intercompany transactions involving loans and interest. NAMA now show in notes to the accounts the nominal value of loans as well as the consideration paid by NAMA for the loans (Brian Flanagan might be a little happier) but it is difficult to understand how NAMA calculates the interest due on loans (is it for the nominal amount or on the consideration paid by NAMA). NAMA doesn’t split cash receipts from developers between interest and capital. It is unclear if cash receipts include involves NAMA’s reported control of rent rolls. Elsewhere when NAMA pays for professional services it might record the expense in its profit and loss account or its balance sheet and it becomes difficult to establish exactly how much is being paid by NAMA to third party service providers.

source :http://namawinelake.wordpress.com/2011/01/07/nama%e2%80%99s-report-and-accounts-for-q32010-%e2%80%93-ten-things-to-look-out-for/

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!

The FINANCE DUBLIN Irish Government Debt Clock

See the Republic of Ireland’s national debt mount up, a measure of the legacy the Irish Government is in the process of bequeathing to the children of Ireland:

                        

                          € 87,669,547,647

 

The FINANCE DUBLIN Irish Government Debt Clock was set at midnight on June 30th 2009, when it was €65.278 billion.

(25 August): S&P downgrade disputed by NTMA, but, the main problem – non banking bailout costs – remain

The most negative aspect of the S&P re-rating on August 24th 2010 is the ‘outlook negative’ aspect, rather than the actual rating, the aspect the NTMA focusses on in disputing the validity of the downgrade. Here’s what S&P say on this aspect: “The negative outlook reflects our view that the rating could be lowered again if–as a result of its support for the financial sector or due to a more sluggish economic recovery (emphasis added)–the government’s fiscal performance improves more slowly than we currently assume.”

“Conversely, the outlook could be revised to stable if the Irish government looks more likely to achieve its fiscal target for the underlying general government deficit of less than 3% of GDP by 2014, or if the banking sector stabilizes more quickly and at a lower fiscal cost to the government than we now think likely.”

As argued many times in this page, since the Finance Dublin Debt Clock was set up in July 2009, while the cost of the banking bailout is admittedly very serious, the much more serious issue is the excessive cost of the state in the economy, which currently sees the national debt as rising by some €18 billion a year. This compares with a estimated total net (once-off) cost of the banking bailout of €25 billion to €30 billion.

Continued emphasis on the (admittedly serious) cost of the banking bailout, Anglo-Irish bank etc., at the expense of focus on Ireland’s unsupportable current and capital spending Budget (now costing 5.35 per cent p.a. in the bond markets to fund) will continue to put Ireland’s credit rating unfavourably under the microscope.

As a close reading and assessment of S&P’s statement shows, a positive result could be achieved by a decision from the Irish Government that it will address the issue of Ireland’s deteriorating credit ratings head-on in the forthcoming Budget by going further than previously announced in cutting down the spending programmes for 2011, 2012, on capital and current account than the (now clearly inadequate) €3 billion it has previously signalled for the 2010 Budget – i.e. bringing forward its fiscal consolidation plan.

Such would be consistent with the principles enunciated by the Minister for Finance in his Beal na mBlath speech on August 22nd. Lenihan’s statement that “We know from the 1980s that unless businesses are confident about the Exchequer’s long term position, they will not create new jobs” shows that this awareness is there – and that policy framed to underpin business and household confidence is key to (a) recovery in tax revenues, which springs from expanded employment primarily, and (b) a stabilisation in the property market, upon which the financial cost of the banking bailout will crucially depend.

Comment

At the above rate we will be well over the  100,000,000,000 Billion  by Christmas so go and get your Christmas shopping now you might not be able to afford it at Christmas !

Any coming budget savings in the 2011 budget will go directly into the Anglo Irish Bank Black Hole and we will need another emergency budget sometime next year when we finally get this shower of gangsters out of government, but I fear the damage will be complete by then! They will by then have helped their pals get everything worth taking of shore and we the people will be left saddled with the bad debts  and all the bills  

Any announcements coming from Brian Clown or Brian Lenihan must be taken with a pinch of salt! the Twiddle Dum and Twiddle Dee politicians are the last people we should rely on for leadership, after nearly two years since the bank crises these two jokers are only now coming to the realization that a bailout of the toxic toilet Anglo Irish Bank wasn’t a great idea after all and the billions powered down that toxic toilet was better spent in retraining the enormous dole queues

Almost two years and 22.5 billions, Clown and Lenihan still cannot  tell the Irish people where this enormous amount of money went, specifically who got this money and why?

Why is it taking this long to say exactly how much has this Toxic toilet has  in bad debts? How many staff has been recruited to this toxic toilet since the financial crises started and why??

Since the announcement of a split of Anglo Irish are we now going to have double staff levels, a second management level, at double the costs, for the same totally discredited bankrupt bank?

Since the work lode will now presumably be less in one or the other good bank, bad bank can we the taxpayers expect a reduction a claw back of the pay rises given to this surplus staff now???

When are we going to see prosecutions of the directors of the banks who have effectively stolen from every citizen of this country? And when can we expect Clown and lenihan resign for the gross mishandling and incompetence of the economy? Since they have effectively destroyed our countries financial independence and with it our soverne independence, they are guilty of economic terrorism

Neither they, nor their cronies should be allowed to benefit in any shape or form from these crimes that includes running off into the sunset with enormous pensions.

it’s time for a change in Irish politics and we must start with a system change this means a constitutional change to make these people personally accountable for their actions whilst in the service of the citizens

Machholz

The Irish National Debt



Mildly encouraging signs have emerged that the Minister for Finance and Government has initiated early action amongst spending departments to obtain spending cuts from budgets in 2010.

However, the National debt shows no sign of abating its ruinous growth, based on the latest update of the national debt from the NTMA, which necessitated only a small adjustment in the Finance Dublin debt clock for this month.

It remains the case that there are just two alternative engines of recovery available to the Irish economy – the private sector, or the public sector. The Government, and an alternative Government, has to choose which horse it will back to restore the economy. The private sector horse has the form, because it has the experience, the talent, the production, engineering, marketing, and exporting expertise that will bring the Irish economy back to growth.

This is an excellent article and well worth reading !Full article link http://www.financedublin.com/debtclock.php

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