NAMA Please explain

limerickman95

OK this NAMA thing is a little confusing to me so can people help me understand it better.

So am i correct in saying this bank NAMA will purchase bad loans off the regular banks for a negotiated price, and the loanees( such as developers) will repay there loans to NAMA.

So if these developers go bust NAMA will then own the collateral for these bad loans(such as land, builders etc?)

So any replies will be fantastic?

Daragh101

limerickman95 wrote: »

OK this NAMA thing is a little confusing to me so can people help me understand it better.

So am i correct in saying this bank NAMA will purchase bad loans off the regular banks for a negotiated price, and the loanees( such as developers) will repay there loans to NAMA.

So if these developers go bust NAMA will then own the collateral for these bad loans(such as land, builders etc?)

So any replies will be fantastic?

thats about it!

Danbo!

Im not too clued in on Economics so can I ask also, without starting another NAMA thread..

Why are AIB asking for a €2bn injection, when they are about to be given billions (25bn is it?) of euro by NAMA? I know they need the money to start lending, but why the extra 2bn?

And everyone keeps saying its the taxpayer footing the 54bn bill. Do they basically mean that the goverment are down that much and therefore public services (roads, hospitals, gardai, etc..) will suffer?

Sorry for the dumb questions, I do know some stuff about other things I swear

Daragh101

Stee wrote: »

Im not too clued in on Economics so can I ask also, without starting another NAMA thread..

Why are AIB asking for a €2bn injection, when they are about to be given billions (25bn is it?) of euro by NAMA? I know they need the money to start lending, but why the extra 2bn?

And everyone keeps saying its the taxpayer footing the 54bn bill. Do they basically mean that the goverment are down that much and therefore public services (roads, hospitals, gardai, etc..) will suffer?

Sorry for the dumb questions, I do know some stuff about other things I swear

i am no expert, but as far as i know the banks will recieve bonds from the government for so many Bn euro. The banks will then go to the ecb and cash these bonds...then the government (taxpayer) will pay this loan off over time!

Jeanious

Also can anyone explain why the government just doesnt buy €54bn worth of shares in the banks?

Government buys €54bn worth of shares, government (presumably) gets a controlling interest in the banks, banks get the €54bn anyway, so happy days all round, no?

Daragh101

coyle wrote: »

Also can anyone explain why the government just doesnt buy €54bn worth of shares in the banks?

Government buys €54bn worth of shares, government (presumably) gets a controlling interest in the banks, banks get the €54bn anyway, so happy days all round, no?


They could buy the banks for a fraction of that price!..
But if they went down the route of nationalization they would still have the bad loans, and on top of that, a bunch of unhappy shareholders and a bit of a monopoly!
Although it might not be a bad idea, because the banks would obviously lend money if the government owned then which is basically what is needed!

chris85

coyle wrote: »

Also can anyone explain why the government just doesnt buy €54bn worth of shares in the banks?

Government buys €54bn worth of shares, government (presumably) gets a controlling interest in the banks, banks get the €54bn anyway, so happy days all round, no?

but with NAMA there will be one organisation hunting the developers down so they will get away with nothing. From a few things ive heard its going to be ruthless against the developers.

Some people think its a bail out for the developers but it aint.

I do think a further 10% off the valuation is necessary.

Daragh101

chris85 wrote: »

but with NAMA there will be one organisation hunting the developers down so they will get away with nothing. From a few things ive heard its going to be ruthless against the developers.

Some people think its a bail out for the developers but it aint.

I do think a further 10% off the valuation is necessary.

The tax payer should have got a greater discount the the 30%, but in reality if we paid too little for the loans nationalization would be certain!...and even at this small discount the banks could still face state ownership!

Jeanious

Daragh101 wrote: »

They could buy the banks for a fraction of that price!..
But if they went down the route of nationalization they would still have the bad loans, and on top of that, a bunch of unhappy shareholders and a bit of a monopoly!

So basically, theyd pay a whole lot less, have the bad loans (which they will have anyway) but at least have a controlling stake in all the banks, which they could sell when the country is back on its feet?
That sounds like a reasonable solution, or am i missing somethin?

Daragh101 wrote: »

a bunch of unhappy shareholders and a bit of a monopoly!

As a great man once said, "Tough Titties!"

Yittisay

i think govt couldnt contemplate nationalisation so went down this route, and i think it's prob best option. the banks will have to cut staff numbers & if banks were nationalised, they would not be willing to make those cuts as it is a fight they would not have the political strength for at the minute - they'd have strikes & pickets and i think they'd rather the banks deal with that themselves (in the same way that they wont/cant take on the public sector as regards terms of employment, pensions etc, even though the economy & exchequer it is crying out for it).

this problem has to be tackled head on & leavin loans with de facto insolvent banks & giving them money to sort it out not the answer. taking them off them and allowing them to resume business (whilst not creatings 10000s more public servants) best option. when and if this mess is settled though there will have to be some punitive tax or special dividends paid on govt shareholdings. that is prob for brighter day though.