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Posts tagged ‘SIMON CARSWELL’

NAMA and Paddy McKillen

SIMON CARSWELL Finance Correspondent

VALUERS FOR the National Asset Management Agency (Nama) cut the valuation given by Anglo Irish Bank to four of Paddy McKillen’s prime US properties by 27 per cent but said that his five-star London hotels were worth 10 per cent more than the bank had assessed.

The properties valued included Anglo’s US head office at 265 Franklin Street in Boston. This was valued by the bank at $131 million (€93 million) compared with a final valuation of $95.6 million set by Nama.

Details of the valuations were provided in filings submitted by Nama in the High Court case taken against the agency by Mr McKillen, a property investor.

The hearing of the case finished yesterday before a three-judge division led by Mr Justice Nicholas Kearns, the president of the High Court. Judgment will be given on November 1st.

Anglo valued the five-star Claridge’s, Berkeley and Connaught hotels in London and properties linked to the Maybourne Hotel Group at £822 million (€934 million); the final valuation agreed by Nama was 10 per cent higher at £905 million.

A final value of £424.9 million was assigned to Claridge’s by Nama for the transfer of Anglo’s loans on the hotels to the agency. The Berkeley was valued at £246.4 million and the Connaught was valued at £183.6 million.

Two other properties associated with the hotels – one in Mayfair and the other in Knightsbridge, London – were valued at £28.8 million and £22.2 million respectively in final valuations set by Nama.

Full story here  http://www.irishtimes.com/newspaper/finance/2010/1015/1224281153988.html

Mean while again SIMON CARSWELL and MARY CAROLAN tells us

FORMER ANGLO Irish Bank chief executive David Drumm has filed for bankruptcy in the United States after the State-owned bank rejected his proposal to settle its legal action in the High Court in Dublin over loans of €8.5 million.

Mr Drumm applied for bankruptcy in a Boston court in Massachusetts near his US home at 3pm Irish time yesterday in advance of the bank’s case starting on October 26th.

Lawyers for Mr Drumm told the commercial division of the High Court in Dublin a short time later that Anglo had last Friday rejected a final settlement offer that he had proposed on September 24th.

He had offered to hand over all assets to Anglo excluding personal effects such as clothes and jewellery, his lawyers said.

Anglo’s counsel told the Dublin court that the US bankruptcy application was “quite an extraordinary turn of events” and that the bank had only just become aware of it.

Lawyers for Mr Drumm said he had “bent over backwards” to reach a settlement of the action. Counsel for Anglo said that it was “a bit rich” for Mr Drumm to seek to take the “high moral ground”.

It is understood that Mr Drumm claims that he proposed handing over assets to Anglo valued at €10.8 million to settle the action.

The 44-year-old former bank chief had offered to put up his €5.4 million pension, under which he is entitled to annual payments of €271,000 from the age of 55.

The assets on offer included half the proceeds – estimated at €1 million – from the sale of a house at Abington in Malahide, Co Dublin, and the transfer of another property in Cape Cod, Massachusetts.

He also offered to hand over €200,000 covering his half-share of a property in Boston which his wife bought from her own funds.

His lawyers had claimed in their September 24th settlement offer that he was “frustrated with the un-commercial stance being adopted by the bank in relation to his proposals”. Following his application, Mr Drumm may retain his €5.4 million pension and could emerge from bankruptcy within a much shorter period than in Ireland. An official appointed by the US court will now liquidate all his assets through forced sales in a move which may result in Anglo recovering a lower amount.

Under the shareholder agreement with the State-owned bank, Minister for Finance Brian Lenihan has control over the bank’s dealings on the loans with former directors.

It is understood that the Minister instructed the bank to take whatever action necessary to secure full repayment of the debts. Anglo’s lawyers claimed in correspondence last July that the Minister was aware of Mr Drumm’s attempts to settle.

It had been anticipated that Mr Drumm would use the hearing of the bank’s action later this month to meet voluntarily with gardaí and other investigators examining the collapse of Anglo, which is costing the State up to €34.3 billion.

Planning such a meeting was now “up in the air” following Mr Drumm’s bankruptcy application, said a well-placed source.

The High Court was told the US court action may or may not disrupt Anglo’s case but this was out of Mr Drumm’s hands, his lawyers said.

It is understood that Mr Drumm has had extensive contact with the Garda Bureau of Fraud Investigation and the Office of the Director of Corporate Enforcement about their investigations and in relation to planning a meeting with them. It is also understood that he has recently made contact with the Government’s commission of investigation, led by former senior Finnish civil servant Peter Nyberg, which is investigating the causes of the banking crisis.

Anglo’s case will be returned before Mr Justice Peter Kelly, who has been managing the case, in the Commercial Court next Tuesday.



comment :

This is unbelievable stuff why are we even giving this guy the time of the day he should be brought back in handcuffs and forced to divulge all he knows about the fraud that went on in this toxic bank. This Pusey footing does not go on to the thousand of decent people that cannot pay their TV licenses and their ESB bills they are brought before the courts for the pittance the owe and yet we have this guy who was at the heart of this corrupt toxic bank that has cost us Billions and possible up to 50,000,000,000:00 billion trying to dictate terms.

We must see prosecutions and jail time been dispensed to all the crooks and no exceptions!

That is why we need a totally new kind of representive in the next Dail people who are not part of the in circle but ordinary people who know which side of the car  there petrol cap is on, people who know that our bills are going up and not going down as advocated by our politicians

People who know what it is like to struggle to pay their mortgages  in other words we need real people living on the same planet we the ordinary people have to live on and not the pampered planet our TD’s have been living on most of their lives

we need to overhall system ,its time for renewal and it can’t come soon enough

A word of warning, the politicians are contemplating ways to cling on to their plum jobs and perks by trying to extend the life of this corrupt and so out of touch government with this notion of a “national government” any such attempt to deprive the public of their democratic right to have a say in their own destiny as laid out in the Irish constitution will bring the public out on to the streets big time .We need a new political mandate to see us through the tough decisions that have to be made but it would be a major mistake to allow the very people and their cronies who caused this disaster to stay in power. Clear them all out and start afresh I say!

Anglo released McKillen from liability over €40m loan

Anglo released McKillen from liability over €40m loan

SIMON CARSWELL, Finance Correspondent

ANGLO IRISH Bank has no recourse to pursue Paddy McKillen for any of the €40 million it lent him to buy shares in the bank. Mr McKillen was one of the 10 so-called “golden circle” of large customers encouraged to buy a 10 per cent stake in the bank from businessman Seán Quinn in 2008.

The bank gave loans of about €45 million to each of the 10 long-standing customers of the bank to buy the shares but only 25 per cent was on a “recourse” basis.

This meant that most of the loan – 75 per cent – was backed only by the shares they bought in Anglo so they could only be pursued personally for the remaining 25 per cent.

It is understood that Anglo reorganised Mr McKillen’s share purchase loan in the weeks following the transaction, releasing him from the 25 per cent of the loan on which he would be personally liable. This meant that unlike the other nine, he was no longer obliged to pay about €10 million due on the loan.

Mr McKillen agreed to take part in the share transaction to help protect the bank at a difficult time but on the basis that he did not profit from the transaction, according to well-placed sources.

He was one of 10 trusted customers approached by the bank in July 2008 to buy 10 per cent of the bank. The bank organised and funded the purchase to prevent such a large amount of shares being sold on the open market, a move which would have collapsed the share price at a critical time.

Full article link http://www.irishtimes.com/newspaper/finance/2010/1009/1224280699537.html


We are hearing about fraud on a massive scale here, insider trading is apparently endemic in the top echelons of Irish society .corruption is the name of the game and these people are walking away scot free!

This revelation is shocking, as I believe we are effectively hearing that Insider trading on Anglo Irish Bank stock was encouraged by the Directors of Anglo Irish and these 10 so called trusted customers were in fact a select few of the golden circle allowed to partake in this deception!.

By calling on these 10 trusted customers in this manner the bank gave an unbelievable, once in a lifetime opportunity, to the people in the know, to make millions on the stock as is falls .Yes I said as it falls by using a little know financial tool called a put option you can make an enormous amount of money as the stock falls and if you know what you are doing you can even put this financial tool on without it even costing you  a penny by getting someone else to pay for it ! 

What is a put option? See video clip In fact this was a no lose situation because of the insider information aspect of this particular event. These guys could only make money, and it didn’t matter which way the stock went

Because a second financial tool comes to mind a financial tool was and is still available to bring about this win win situation, by using an option strategy called a straddle this was a once in a lifetime opportunity that presented itself to these individuals .I know this because I have been active in the stock markets for the past 15 years and I paid an enormous amount of money to learn how to use these financial instruments in the United States and here in Ireland

So what is a Straddle Then? Here in this video clip the Straddle is explained.


I have used this tool a number of times right before an earnings announcement particularly in biotech stocks as they make drastic moves on good or bad news. So the News is what makes this particular financial tool interesting, having insider information can make you a millionaire over night! in other words depending on what news the Golden circle had and what the Directors of Anglo Irish Bank had  and the other banks had, they could have made a killing, a once in a life time opportunity to make millions . All this can be done at a push of a button.

I am not advocating anyone should take up using options or take up trading nor am I saying that the golden circle did these types of trades; I am saying they had the opportunity to do so and in the case of the bank directors they would have known about these financial tools.

My point is with specific information these guys had an unbelievable opportunity to make millions. Did they just pass on it?????

Ps Trading Options is extremely risky and only after paying thousands to learn about them will you ever hope to make back what it cost you to learn about them in the first place.

My advice stay away and keep your day job!

No accountabilityfrom Walsh!

Walsh defends Irish Nationwide board
 By SIMON CARSWELL, Finance Correspondent Irishtimes .com
THE FORMER chairman of Irish Nationwide, Michael Walsh, has said anyone who was involved in banking during the crisis was unhappy with what had happened.
Speaking as he arrived at Dublin airport on Friday night off a flight from London, Dr Walsh was replying to a question about whether he felt any remorse about the cost of the lender’s bailout or with what had happened at the now State-controlled lender.
He declined to comment on the Government’s move to double the State’s bailout of Irish Nationwide from €2.7 billion to €5.4 billion last week due to higher than expected losses on property loans.
 He also had no comment on his stewardship as chairman of the building society or the management of the institution by former chief executive Michael Fingleton.
 Full story here link http://www.irishtimes.com/newspaper/finance/2010/1004/1224280310716.html


 Here we have a man who should know better, he was part of a group who presided over the reckless lending to a small group of developers and now he hasn’t the decency to admit or take his share of responsibility, and in all probability he is in receipt of a bonus, pension and probably got a nice sum on his way out the door of Irish Nationwide,the building society he helped to destroy leaving the taxpayers with a 5,000,000,000 : Euro headache.He should be brought before the courts on charges of grosses dereliction of duties and if found guilty he should not be allowed to benefit from his questionable actions whilst working in the Irish Nationwide building society.
Why were the CAB not called in to investigate the obvious fraud that went on there ?
Why are these people able to fly around the world unhindered?One can’t help but get the feeling that they are been protected by the powers that be!
I wonder how many TD’s have loans with Anglo Irish Bank, Irish Nationwide Building society and now Allied Irish Bank ,Could it be that if the truth were known some of our TD’s would be declared Bankrupt and would then have to vacate their Dail seats and the Government would fall.
There should be at least a full independent financial audit done (By an foreign company) on these banks with a full list of the debtors and creditors published for all to see, so we can establish if there was a conflict of interest by any of the ruling élite of this country and if there was then criminal charges must be brought against such persons      


The cost to the Irish taxpayer



Photo Machholz

 What the bailout is costing Irish taxpayers

Anglo  – €29.3 billion (including €22.9 already committed by Government) – could go to €34.3bn in severe worst-case

AIB  – up to €6.5 billion (including €3.5 billion already invested by Government) A Basket case

BoI  – €3.5 billion (doesn’t need any more capital from Government)(So it says but can you belive them  I don’t!)

INBS  – €5.4 billion (including €2.7 billion already committed by Government) why is there no prosecutions for this fraud?

EBS  – €350 million (further requirement for €440 million and possibly more which is expected to come from its new buyer)

can anyone belive any buyer will stump up this kind of cash now?

Irish Life & Permanent  – doesn’t need any capital; didn’t engage in property development lending

No ,just helped Anglo Irish Bank to defraud its own investors and customers and Irish Life& permanent is now screwing its own customers now  

Total:  €45 billion – could go to €50 billion in Anglo severe stress case

Of this, some €35 billion of this is debt and is unlikely to be recovered – the €6.5 billion to be invested into AIB and €3.5 billion already invested into Bank of Ireland is regarded as an investment by the National Pension Reserve Fund, the €24 billion sovereign wealth fund held by the Government. The State is likely to make this €10 billion back and could make a profit by selling down the shares over time.

The figures relate to the State’s investments in the banks. AIB’s capital requirement is €10.4 billion of which it has raised €2.5 billion from the sale of its stake in Poland’s Bank Zachodni WBK, leaving €7.9 billion to raise – some of that will come from the sale of the 22.5 per cent stake in US bank M&T, the sale of its UK business and further (possible) investment from existing shareholders and institutional investors. The Government will underwrite the sale of new shares.

source http://www.irishtimes.com/newspaper/breaking/2010/0930/breaking37.html?via=rel

What about the dierivitave  losses that the Banks are hiding Bank of Ireland and Allied Irish Bank ?


Nationwide issues €4bn in bonds to itself

Nationwide issues €4bn in bonds to itself
In this section »
Lenihan says key bodies backed guarantee move

IRISH NATIONWIDE: IRISH NATIONWIDE has issued €4 billion of Government-guaranteed bonds effectively to itself. It can use the bonds to draw €4 billion in funding from the European Central bank to help tide it over a key refinancing period later this month.

The building society has €4 billion of debt covered under the original blanket Government guarantee maturing at the end of this month. The bonds will allow the building society to draw fresh funding from the ECB if necessary to repay this debt against a backdrop of heightened funding pressures across the guaranteed institutions.

A spokesman for the building society insisted Irish Nationwide had sufficient cash to repay €4 billion of guaranteed debt which must be repaid later this month.

He said the listing of the bonds was to “improve the liquidity of Irish Nationwide” ahead of the building society shrinking radically as a consequence of the transfer of €9 billion in loans – more than 80 per cent of its loan book – to the National Asset Management Agency and the receipt of Nama bonds to improve liquidity.

It is understood that Irish Nationwide will start drawing ECB funding using the bonds as short-term collateral this week and will refinance the debt with Nama bonds as they are issued before all loans are transferred by February.

In what was described as an unusual move by markets sources, Irish Nationwide has listed the bonds but not sold them to investors and they remain on the balance sheet of the building society.

The bonds were listed under the building society’s so-called “global medium-term note programme” with a maturity of six months.

The timing allows the society to use ECB funding now to tide Irish Nationwide over the end of the year when the extended Government blanket guarantee expires.

Michael Cummins, a director of fixed-income specialists Glas Securities, said it was unclear how Irish Nationwide would issue the bonds to draw ECB funding in order to repay debts maturing this month. However, retaining them on the building society’s balance sheet “would not be standard practice”, he said.

One bond analyst said he had never seen a funding transaction structured in such a way, describing it as “a type of micro-quantitative easing” – a means of allowing a central bank to print money to support an institution.

“You could say it is innovative in some respects – it gets them through the September 2010 refinancing,” said the analyst.

A spokeswoman for the Central Bank said it did not comment on loan facilities given to institutions.

“Where an asset class is eligible for ECB borrowings, the Central Bank will provide funding on behalf of the Eurosystem, in accordance with the rules and procedures agreed by the Eurosystem,” she said.

Comment :

This is sheer madness now this corrupt institution is placing bonds debts like confetti at a wedding
With all these billions sloshing around it should come as no surprise to anyone if a few hundred million “Go missing”
There are enough gangsters involved with this process, and we the taxpayers are heading for a big fall mark my words when billions are floating around like this you can be sure the crooks are not to far behind
Irish Nationwide should be shut down and the directors responsible for this disaster should be brought up on charges of fraud and not heading off into the sunset waded down with enormous pensions and bonus

Here is what The story.ie has to say Link http://thestory.ie/2010/09/08/banks-qe-themselves/

Banks QE themselves
Posted: 08 Sep 2010 03:03 AM PDT
It seems we have something of an answer as to how Irish banks expect to get through the €30bn funding cliff this month. In the Irish Times today:
IRISH NATIONWIDE has issued €4 billion of Government-guaranteed bonds effectively to itself. It can use the bonds to draw €4 billion in funding from the European Central to help tide it over a key refinancing period later this month.
The building society has €4 billion of debt covered under the original blanket Government guarantee maturing at the end of this month. The bonds will allow the building society to draw fresh funding from the ECB if necessary to repay this debt against a backdrop of heightened funding pressures across the guaranteed institutions.
So what does that mean? Irish Nationwide is issuing bonds (these ones) and then using the bonds as collateral to borrow from the ECB marginal lending facility (MLF), also known as the discount window.
This is not dissimilar from the practice we learned of last week where nationalised bank, Anglo Irish, is using promissory notes issued by the Government as part of recapitalisation (ostensibly long term), as collateral with our own Central Bank in order to fund itself (they dare not go to the ECB?), at a rate of 1:1. This appears to have gone relatively unnoticed, and is buried in Anglo’s interim report, referred to as the Special Master Repurchase Agreement, which comes on top of the Master Loan Repurchase Agreement.
Expect to see other Irish bank create fictitious money in order to fund themselves via the discount window.
It also seems that this type of transaction is nothing new. Back before the September 2008 crisis, it seems that Lehman Brothers were doing something similar. Per the FT back in April 2008:
It was rather elliptically suggested by Bloomberg (from a Morgan Stanley analysis) that Freedom’s notes had been used as collateral by Lehman in the Fed’s primary dealer credit facility. And that that was – in the main – the reason the CLO had been created and successfully closed.
But there’s some confusion. In this article, Bloomberg say Lehman sold the $2.2bn of senior notes in Freedom “in a private placement”, which can’t be true if they’re being used in repos with the Fed by Lehman. As for the equity tranche, it’s unrated, so the NY Fed won’t accept it as collateral.
The WSJ reports that only some of the senior notes may actually have been pledged to the Fed. The small amount was supposed to “test” what the Fed would accept.
Since the test seems to have gone well, can other banks be expected to jump on the CLO bandwagon? JP Morgan is understood to be doing just that – with rumours of senior notes of a recently closed CLO being pledged in the PCDF.
But even if Freedom, and other CLOs, were created with the express intent of pledging notes to get liquid collateral through the PCDF, so what?
And it wasn’t only in the US this was happening. In the UK these are referred to as ‘phantom securities’:
In the depths of the financial crisis, the Old Lady began expanding the bank collateral eligible for use at its various liquidity operations, and starting new ones up. Unsurprisingly, given market conditions at the time, banks flocked to make use of the facilities. In fact, they began creating things specifically for use at the BoE, which the Bank gave the attention-grabbing title of ‘phantom securities.’
Some day, we will eventually we will have to confront reality, and stop this merry-go-round of fiction.

Anglo resists Nama loan bid

Anglo accuses NAMA of “factual errors”. Pots and kettles to have a slanging match?

July 20, 2010 by source namawinelake

Simon Carswell in today’s Irish Times reveals further evidence from the Paddy McKillen v NAMA case, now set down for four days hearing from 12th October, 2010. His piece concludes with saying that Paddy has €5m of land and development loans in California and Budapest and a “connection exposure” of €800m.€5m is of course the NAMA self-imposed limit for determining eligibility of borrowers for transfer (for Anglo, AIB and BoI – there is no limit for INBS and EBS) and a consequence of transfer is that all loans with NAMA financial institutions get pulled across as well. Of particular interest from the article is the revelation that Anglo wrote a letter to NAMA in June 2010, just before Paddy lodged his application for a judicial review, in which Anglo claimed NAMA had made “factual errors” in its representations to Paddy’s solicitors  in stating that neither Anglo nor the agency objected to the purchase of any of his loans on grounds of eligibility. Of course Anglo’s “factual errors” in 2008 are well-documented, its November 2009 restructuring plan contained fanciful projections and there is much debate about whether €22bn of unrecoverable State-aid will be the “upper limit” of what it requires.

This objection from Anglo to transferring Paddy’s loans begs the question : why would massively insolvent Anglo, a company that has needed unrecoverable State-aid of €10.3bn since December 2009 and is likely to need billions more in *the very near future*, why would such a company object to transferring loans (“good quality and performing” according to Paddy’s spokesperson) which would presumably attract a slight haircut and would swell Anglo’s coffers with nice and clean ECB-redeemable bonds? Why is State-owned Anglo acting in a way which will increase State-aid, at least in the short term?


This clearly demonstrates the intention of Anglo to pass off all the toxic debt on to the Irish taxpayers and try to hold on to the choice bits that will form part of a New Bank setup to be announced later on this year

this New Bank will then be sold to the same bailed out developers and the big bond holders leaving the Irish taxpayers stuck with an avalanche of toxic worthless crap!

Anglo must not be allowed to get away with this !

Lies and dam Lies from Brian Lenihan!

Quotes from Brian Lenihan since the bank guarantee:

Source http://www.thestory.ie

photo Machholz

On Breakfast with Newstalk, April 26 2010.

First of all, that’s the position in 2009, Eurostat hasn’t decided it yet, that’s our assesment of how they will decide it, we’ll still argue the toss with them. We have to deal with 2010 yet, but let’s assume that you’re right for a minute and that all the €8bn has to be added on in 2010. Let’s assume that. We won’t be borrowing the money, we’ll be borrowing the money over a period of ten or fifteen years. We’ll actually be up fronting – in accountancy terms – the figure, but we will not in fact be borrowing… – April 26 2010.

Also on Breakfast with Newstalk

Now that I’m the shareholder in Irish Nationwide I will clearly ensure that whatever money is owed by Mr Fingleton is paid by Mr Fingleton. – April 26 2010.

Also on Breakfast with Newstalk

BL: No, no, listen, listen. This not good for the country , and it’s inaccurate. If next year we’re obliged to include the €8bn, the €8bn will not actually be borrowed next year the device of the promissory note means we borrow…

Ivan Yates: No, I know the promissory note is over ten years. You’re missing the point…

BL: No you’re missing the point! This is an accounting device! This is not real borrowing! What the markets look at is real borrowing. Not accountancy devices… – April 26 2010.

Speaking to media…

“The decisive and bold steps we have taken are not popular; and the honest and full disclosure by the Government and its agencies of the appalling mess we have uncovered within our banks has shocked the nation,” Mr Lenihan told the Dail.  “But I do believe that there is recognition among the citizens that the measures we have taken are necessary. And I believe the work of NAMA in cleaning up the banks’ balance sheets and forcing them and their borrowers to face up to their losses is winning the respect of the public.” – April 21 2010,  Irish Independent

“One of the good things about the steep discount, averaging 47 per cent, is that the residential property market will now be stabilised at a realistic level… You can now buy in confidence that the price is realistic.” – April 4 2010, Irish Independent

[Submitted by CO’D]:

The Financial Regulator has advised that all the financial institutions in Ireland will continue to be subject to normal ongoing  regulatory requirements. This very important initiative by the Government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets. As far as the question of ‘moral hazard’ is concerned, it will be a priority for the Government to ensure that the highest regulatory standards and standards of corporate governance apply in all of the institutions concerned including in relation to lending practices to safeguard the interests of taxpayers against any risk of financial loss. – Department of Finance statement, September 30 2008

[Submitted by CO’D]: During Dáil debate on credit institutions and financial support,

Olivia Mitchell (FG): We need to see the terms and conditions to know what will happen with regard to these people. Is there any requirement for the banks to restructure their loans? Will they be allowed to make a massive number of repossessions and have fire sales, driving house prices down further and sending the economy into even deeper recession? Has the Government any plan to deal with this?

Brian Lenihan: This is the plan.

Olivia Mitchell: […] However, we need a return to the banks of old — to the image we had of them as being dull, staid, boring, cautious and careful. We no longer have that image. What is the Government’s plan to create the conditions that will ensure this happens? What will happen to restore confidence in the banking system? If we do not restore confidence in the banking system, what the Minister is doing now——. I do not know what the Minister is laughing at.

Brian Lenihan: I am not laughing. I am allowed to smile. – October 1 2008

[Submitted by DC]: As reported by Simon Carswell in The Irish Times…

MINISTER FOR Finance Brian Lenihan has said the bank guarantee scheme was “a necessary first step” and “the cheapest bailout in the world so far”.

Mr Lenihan said the guarantee was “the cheapest bailout” compared with bank rescues in other countries, including the UK and the US, where “billions and billions of taxpayers’ money are being poured into financial institutions” – October 24 2008

Irish Times…

“We are not rushing into the banks without knowing precisely what the position is in those banks” – Nov 20 2008

During the Stabilisation of Public Finances debate, Dáil Eireann

In the context of any capitalisation the due diligence exercise will yield further information to enable us to do a far more precise identification of risk before we formulate policy on it. I would be reluctant to commit the taxpayer on any issue connected with risk without a full and definitive assessment of the risk in the institutions themselves and we must await this assessment. – Feb 5 2009

Following the publication of Anglo Irish Bank’s 2009 results. Minister Lenihan said he welcomed the increased scrutiny of Anglo as an opportunity to bring openness to the bank…

“which will ultimately allow us to draw a line under past activities”. “It is an opportunity for Anglo to employ a fully transparent approach to addressing the inappropriate activities that took place at the bank and provide comprehensive details to all stakeholders who deal with Anglo and who deal with Irish financial institutions generally.” – Irish Independent, Feb 21 2009

When challenged as to why he was not nationalising banks (at this time the State had already nationalised Anglo Irish Bank and taken a 25 per cent stake in Bank of Ireland and AIB).

“I do really want to scotch the idea that there are huge risks to the taxpayer in the valuation process because we are not nationalising these institutions.” – Irish Times,
May 18 2009

Nama Bill, Dáil Eireann.

NAMA will ensure that credit flows again to viable businesses and households by cleansing the balance sheets of Irish banks. This is essential for economic recovery and the generation of employment. It will ensure that we avoid the Japanese outcome of zombie banks that are just ticking over and not making a vibrant contribution to economic growth. – Sept 16 2009

Nama Bill, Dáil Eireann.

I am not prepared to contemplate the establishment of an entity that has no responsibility or accountability to this House. – Sept 16 2009

Nama Bill, Dáil Eireann

Nothing in the NAMA legislation will result in more repossessions of family homes. – October 14 2009

On the nationalisation of Anglo, during a debate on banking regulation in the Dáil

This decisive step was taken to safeguard the interest of the depositors of Anglo Irish Bank and the stability of the economy. I want to assure the House that this decisive step was taken to ensure the new nationalised bank will collect all debts due from persons who owe moneys to the institution. – Feb 18 2009

In response to written question from Kathleen Lynch

Taking account of the advice received the Government has proceeded with a comprehensive recapitalisation of Ireland’s two main banks and with the nationalisation of Anglo Irish Bank. The Government is also in discussions with the other covered institutions, Irish Life & Permanent, Educational Building Society and Irish National Building Society concerning their respective positions. – Feb 18 2009

In response to a written question from Arthur Morgan

The recapitalised banks have reconfirmed their commitment to an extensive credit package which will help to increase lending capacity to small and medium enterprises by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. The credit package also provides for a €100m environmental and clean energy innovation fund to be established by each bank. All the steps that I have outlined have been taken by the Government to ensure that the public interest is secured so that the financial system in Ireland meets the everyday financial needs of individuals, businesses and the overall economy. – March 26 2009

Written answer to Arthur Morgan

Our approach will facilitate a sustained flow of credit on a commercial basis to individuals, households and businesses in the real economy. – July 8 2009

When questioned on the delays in implementing Nama legislation on Morning Ireland

“We can’t have a lawyers’ bonanza and that is another good reason why we have to get this right.” – May 18 2009

Kicker; written answer to Joan Burton

Arthur Cox solicitors have been engaged by my Department since September 2008 to provide advice in relation to general banking matters including the Bank Guarantee scheme, the nationalisation of Anglo Irish Bank and the recapitalisation of AIB, Bank of Ireland and Anglo Irish Bank. The company was paid €1,628,024 in 2008 and €2,254,263 has been paid to date in 2009. The sum of €5.4 million has been allocated for legal advice for 2009 and an estimate of €3 million has been set aside for legal advice in 2010.

PriceWaterhouseCoopers was retained by the Financial Regulator in late 2008 to assist the Financial Regulator with a review of the financial and capital positions of Irish banks and to enable the Financial Regulator to advise the Government on what action needed to be taken. The work undertaken involved an initial high level assessment of the capital and liquidity levels of the institutions, stress testing of the institution’s loan portfolios over a three year period, and review the valuation of properties held as collateral against the main property loans.

The total fees paid by the Financial Regulator to the company in respect of the work was €3.8 million, which has been completed. In addition, the Financial Regulator has paid €0.84 million to Jones Lang La Salle for financial and property consultancy services in relation to the Bank Guarantee Scheme.

The National Treasury Management Agency paid a total of €7.3 million to Merrill Lynch for investment banking advice up to 30 June 2009. Following a competitive tender process in July, Rothschild have now been awarded the contract for investment banking advice. The NTMA has also retained an economist however the terms of his contract with the NTMA were agreed on a confidential basis. In addition, following a competitive tender process, the NTMA engaged HSBC and Arthur Cox to provide advice in relation to NAMA. – Sept 22 2009

NOTE: I’ve gone through the Dáil record and archives of the Times and Indo, but haven’t listened to radio or TV interviews. If anyone has a bit of time to go back and listen to a Morning Ireland/Prime Time/The Last Word/Whatever interview… t’would be useful.

* a word members of our Government like to use when scripting excuses for the negative outcomes that result from badly implemented policy or regulation. Usually follows “unforeseen”.

NAMA’s special purpose vehicle(Up-Date)


PRIVATE INVESTORS will be able to participate through the asset managers of the State’s largest banks and Aviva in investing in a majority stake in the special purpose vehicle (SPV) behind the National Asset Management Agency (Nama).

The structure and shareholding of the SPV is expected to be announced shortly by Nama.

A group of fund managers, including the asset management units of AIB, Bank of Ireland and Irish Life & Permanent (IL&P), is expected to invest some €74 million, matching a €26 million investment by the State in the SPV.

The Government has set up the SPV with private investors to buy the loans with Nama as a way of keeping the agency’s estimated €54 billion debt off the State’s balance sheet after it purchases loans with a face value of €80 billion.

The SPV would issue two types of shares with Nama holding the majority of voting shares, giving the State control over the entity but leaving private investors with majority ownership of the equity.

Discussions on the structure of the SPV have taken place with the asset management firms, led by the Irish Association of Investment Managers. The €100 million invested in the SPV will be used as capital for Nama, which can borrow up to €5 billion to finance unfinished development projects.

Irish Life Investment Managers (ILIM), ILP’s fund management division, Bank of Ireland’s New Ireland Assurance and Aviva Investors are expected to lead the private investments in the SPV

source  www.itishtimes.com

Banks await loan acquisition schedules

Nama has missed three deadlines as lenders and the agency struggle with complex valuations, according to


source http://www.irishtimes.com/newspaper/finance/2010/0227/1224265277431.html

NOW THAT the valuationshas signed off on the National Asset Management Agency (Nama), the delayed task of transferring the top 10 developers and loans of €17 billion can proceed.

The green light from Brussels allows Nama to start buying loans with a face value of about €80 billion from five guaranteed lenders for an estimated €54 billion, though both figures could change.

Preparatory work has so far proceeded slowly with the amount of paperwork connected to the top borrowers creating a bottleneck of information within Nama that its small staff and army of outside contractors are busy trying to process.

Preliminary work has been slow as the lenders, and Nama, have struggled to deal with complex valuations in a market with no buyers, and grappled with tricky legal and financial due diligence on title and loan files, with dedicated teams of staff in each lender.

Nama has missed three deadlines to process the transfers, the most recent being yesterday.

March 5th has been set as the next deadline when the first transfers will begin, though not all of the loans connected to the top 10 will move on the day. Minister for Finance Brian Lenihan has said the top 10 borrowers will be transferred by the end of next month.

As revealed first by The Irish Times last week, they are developers Liam Carroll, Bernard McNamara, Seán Mulryan of Ballymore, property financier Derek Quinlan, Joe O’Reilly, the developer behind the Dundrum Shopping Centre in Dublin; Paddy McKillen, owner of the Jervis Street Shopping Centre in Dublin; Treasury Holdings (which is owned by Johnny Ronan and Richard Barrett); Cork developer Michael O’Flynn; Dublin builder Gerry Gannon, co-owner of the K Club golf resort in Co Kildare; and Galway businessman Gerry Barrett, owner of Ashford Castle in Co Mayo and G Hotel in Galway.

The financial institutions are awaiting acquisition schedules outlining the specific loans that Nama will acquire as well as the crucial “haircut” to be applied to each.

Once known, this will allow the banks to assess the losses to be incurred on the discounted sales, which will trigger a requirement for capital to meet the shortfall.

State-owned Anglo Irish Bank faces the most pressing capital need as it is moving the largest amount in the first wave – close to €10 billion of the €30-€35 billion it will eventually transfer.

Allied Irish Banks is moving more than €3 billion in the first wave, Bank of Ireland over €2 billion, Irish Nationwide just shy of €1 billion and EBS building society about €150 million.

The commission will assess the compatibility of the transferred loans as well as the actual transfer prices when they are passed on by the Government to Brussels. These reviews include mechanisms to allow for the claw back of money in case of overpayments.

The lenders are already preparing the paperwork for the second and third waves of transfers, though they have pressed Nama to reduce the level of information demanded by the agency.

Given the volume of paperwork and the scale of the sums involved, processing the top 10 borrowers will preoccupy Nama and the banks for most of next month.

As with all complex transactions the devil is in the detail

Two points that immediately spring out of this article is the inbuilt reviews that include a claw back facility on possible overpayments

This will have consequences for the Banks balance sheets as this clearly implies a possible debt !

The second point is that the banks seem to be reluctant to give full details and are pressing NAMA “to reduce the level of information demanded by NAMA”

This cannot be allowed, under any circumstances


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