NAMA

ranger4

Acording to irishtimes.com Nama officials are expected to ask gov to Limit purchaise of toxic assets from banks to Loans exceeding 5 million euros as this will significantly reduce the number of borrowers falling under the "bad bank" plan. Not sure if this would be possitive for ire banks as they would be forced to take more writedowns with debt, could banks possibly prefer to take on the smaller bad debts upto 5 million and make some form of profit from it themselfs by selling this debt?

ranger4

Good job for investors that FG are not in power as their finance minister wants to create a "good bank" which would take the performing assets and Loans from aib-boi etc and Leave the banks with the "toxic" debt to sort themselfs, Thankfully this plan will only be a pipe dream for bruton as i couldnt see the eu running with it, also such a plan would be a total disaster with a run on deposits and investors pulling out totaly from ireland.

Time Magazine

ranger4 wrote: »

Good job for investors that FG are not in power

Given the government's record of (i) inflating the construction bubble; (ii) "regulating" the banking sector; and (iii) managing the nation's finances... I'm not sure I agree.

TTNYWWBM

See page 28 of 'Business & Finance' Magazine, it forewarns that a post-NAMA share price for BOI will be down to 1.20 as the debt has value, even if it's toxic. :eek:

This does not make any sense to my common sense part of my brain, but if the debts are transferred without any renumeration it of course will affect the overall TNAV of the company! Davy and Goodbody analysts have predicted this and B+F journalist suggests taking some of your stake out now not to gamble it all and buy back in post NAMA for future gains.

Go on surprise your newsagent buy B+F mag and read page 28, I couldn't believe my feckin eyes when I read this!!! :eek:

MrMatisse

ranger4 wrote: »

could banks possibly prefer to take on the smaller bad debts upto 5 million and make some form of profit from it themselfs by selling this debt?

Its very unlikely. Who would by mortgage debt securities these days without asking for a big discount, especially notorious irish property loans.

ranger4

The Economist wrote: »

Given the government's record of (i) inflating the construction bubble; (ii) "regulating" the banking sector; and (iii) managing the nation's finances... I'm not sure I agree.

Doint believe if fg were in power that there policys would have made a difference to be honest, we would still be dealing with present banking, housing etc etc problems, Brutons idea with creating a so called "good bank" would most definitely make the present situation much worse with investors who are now begining to look at ireland as in investment for the future totaly abandoning ireland and leaving us no option but to let the IMF dictate and potentaily run the country.

ranger4

Really-Stressed wrote: »

Its very unlikely. Who would by mortgage debt securities these days without asking for a big discount, especially notorious irish property loans.

yes, but Letting the bank offer new debt restructure terms to exsisiting mortagage holders by giving more time to pay arears, payments etc would suit both the banks and lenders eventually giving the banks some badly needed capital whielst giving extra time for borrowers to pay off their debt.

TTNYWWBM

Keep an eye on this website for latest news direct from Horses Mouth.

Hanley

Just to be clear... By "buying" these "toxic" loans NAMA will in effect force the banks to be recapitalised??

I've had my head in books for the last 6 weeks, so I'm not too sure of the specifics, but how is it going to work? Loans bought on a case by case basis? How do they decide the discount? Will the banks take the impairment charge and erosion of capital, or is there some way around it?

ranger4

Hanley wrote: »

Just to be clear... By "buying" these "toxic" loans NAMA will in effect force the banks to be recapitalised??

I've had my head in books for the last 6 weeks, so I'm not too sure of the specifics, but how is it going to work? Loans bought on a case by case basis? How do they decide the discount? Will the banks take the impairment charge and erosion of capital, or is there some way around it?

I wonder will we see a rights issue possibly with boi first in order to raise their capital base when nama starts taking toxic assets from the banks, Ifso we can expect dilution of exsisting shareholders with Large correction of sp?

TTNYWWBM

Hanley here asks the questions we all should be getting answers to in the press, I am sick of Economists, my Accountants and the business press reporting utter tosh about NAMA, they should know better!

Taken off www.nama.ie the attached document makes the most simple sense of it all.

An Accountant will tell you that 'debt' has value and removing this from a balance sheet for less money will reduce the potential of the company. Yes this is usually true in business, but in this case it's not. 60% Govt bonds in the hand is better than 100% in the bush and NAMA documents state this! This will remove property sector loans over 5m as it seems they are 'toxic' and no longer can be described in any way as collateral.

This should be fantastic for the shareholder, in the short term bad for the taxpayer, and add 48 to 54bn to our already ridiculous national debt of 61bn euro! But good for the SMEs as they can get more flexibility and borrow easier to help almost ALL of us ride out the recession recovery. So this according to the economists this is far better in the long run, and prevents the banks being 'nationalised' which would be a disaster and thankfully is most certainly not going to happen now.

But remember NAMA will be seeking repayments on any loan bought, so technically they could actually make a profit on these amounts, buying at 60 and recouping 100 less expenses! Which could be good for the taxpayer in the long run!

What does this all mean, why is no analyst giving us a straight answer like... YES the bank share prices will rise or NO the bank share prices will fall? The answer is THEY DONT KNOW!

Who knows which way the cookie will crumble, perhaps it will be a self fullfilling prophecy? Nervousness will cause panic selling around NAMA implementation, or Confidence will cause a frenzied rally as more investors jump on to make a few points?

Anyone got a Crystal Ball??? IMHO I think the share will continue to rally and dip as more punters buy in than cash out daily for the next few weeks to the start of NAMA, possibly hit a 3 euro-ish height for AIB and BOI maybe a bit less, a shrewd approach is to buy in now as low as you can (if you have already then 'hold'), let it appreciate in the coming weeks and then see what transpires at the start of the NAMA implementation, it will not come into full effect immediately, it will be done in blocks of loans, then see that happens to the share prices, if it rises stay in if it falls cash out as quickly as possible, and buy in at a more opportune time, but you still will have made a nice few points! All in my personal opinion not advice! :cool:

royaler83

ranger4 wrote: »

I wonder will we see a rights issue possibly with boi first in order to raise their capital base when nama starts taking toxic assets from the banks, Ifso we can expect dilution of exsisting shareholders with Large correction of sp?

If there is a rights issue then there will definitely be a huge dilution in the SP. Lloyds recently had a share offer. For every share one owned, one could buy .63 of a share at 38p.

I'm fairly sure when they announced that there would be an offer the SP went up to 1pound (presumably people wanting to get on board to gain extra shares at a discount).

Then when details were announced ie .63 of a share at 38p the dilution took place and the next morning the price opened at 70p, dropped to 60p and now rising again due to the good news about large up-take of the offer thus minimising the chances of further government help.

I'm open to cririsicm on this post but fairly sure that was the 'jist' of it

woodseb

royaler83 wrote: »

If there is a rights issue then there will definitely be a huge dilution in the SP. Lloyds recently had a share offer. For every share one owned, one could buy .63 of a share at 38p.

I'm fairly sure when they announced that there would be an offer the SP went up to 1pound (presumably people wanting to get on board to gain extra shares at a discount).

Then when details were announced ie .63 of a share at 38p the dilution took place and the next morning the price opened at 70p, dropped to 60p and now rising again due to the good news about large up-take of the offer thus minimising the chances of further government help.

I'm open to cririsicm on this post but fairly sure that was the 'jist' of it

you're right about the dilution - any rights issue involves a dilution but not always detrimental to the share price depending on the circumstances of the issue ie a rescue capital increase

the lloyds one wasn't a typical rights issue by the way, not to take it too far off topic but it was offering shareholders to buy back the government's stake at the price the govt paid for it